NEWS
16 May 2013 - Pengana Australian Equities Fund
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| Manager Comments | As at April 30th, cash (including notes and preference shares) represented 29% of the Fund. The top five holdings by value were: DUET Group, ANZ Bank, Telstra, NAB and Caltex. The largest positive contributors to the month’s performance included ANZ, Telstra, NAB, DUET Group, Resmed and Woolworths. The only detractors of any consequence (and nevertheless small) were Seven Group and XRF. The Fund acquired a new holding in AMP. In addition, the Fund deployed cash into existing holdings including Caltex, DUET Group, Seven Group, ANZ, Tatts Group, Mermaid Marine and Ainsworth Gaming. The Fund’s exposure to non-Australian dollar earnings streams (inclusive of companies with global earnings profiles such as Resmed and News Corporation, NZ based companies and US dollar exposure) stands at 15%. The Fund also trimmed its holdings in News Corporation. Robust share prices have narrowed the Fund's investable opportunity set. In addition business activity levels continue to be muted with many sectors reporting evidence of a deteriorating operating environment. The re-rating of many companies’ share prices may be due to the (not immaterial) impact of a lower cost of money environment and the resulting positive effect on long duration assets (particularly off a low base) rather than the improvement in the outlook for revenues and earnings. Australian businesses are still fighting cyclical and structural factors such as a cautious consumer, the impact of a lack of confidence in the Government’s policy decisions (exaggerated by a prolonged election campaign), the increasing effects of a strong Australian dollar on domestic business’ competitive position and growing uncertainty in the mining and related sectors. |
| More Information | » View detailed profile of this fund |
15 May 2013 - Insync Global Titans Fund
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| Manager Comments | Most global equity markets rose in April, with the S&P 500 closing at a new all-time high, despite sub-par economic conditions prevailing in most parts of the developed world. Continued quantitative easing and negative real interest rates are exerting a powerful influence on the pricing of financial assets, but at the same time are also increasing risks within the financial system. The Manager notes that markets can run further, perhaps much further, but as valuations become extended and bullish sentiment for equities becomes more and more the consensus view, the need for vigilance and portfolio protection becomes greater. This can sometimes lead to short term relative under-performance versus equity indices but is done for the purpose of preserving capital and generating long term positive returns. Momentum following in the pursuit of short term relative performance often results in significant long term losses. The Fund seek to generate strong positive returns by investing in companies that can grow even in a tough operating environment and, the higher the market goes, the more we would look to hedge market risk. The unit price increased by 1.6% in April. The biggest positive contributions came from Sanofi, Coach, Roche, Walt Disney and Accenture. In the case of Coach, the shares of the luxury handbag manufacturer jumped by over 17% during the month on the back of solid quarterly earnings as revenue growth gained momentum in the US and China. The Fund's geographic distribution of investment, by listing, is North America 39.7%, Europe 26.4%, UK 26.3% and cash and puts 7.6%. In terms of the Fund's underlying metrics the Manager notes that the average market cap of equities in the portfolio is A$99.1bn with a weighted avg forecast dividend yield of 2.90%. The weighted avg forecast PE ratio is 15.4x and weighted avg ROE 21.3%. The Fund has no hedging in place at the moment. |
| More Information | » View detailed profile of this fund |
15 May 2013 - Meet the Manager - Morphic Asset Management
Continuing our highly successful "Meet the Manager" presentation series, Jack Lowenstein, Managing Director, Joint Chief Investment Officer, Morphic Asset Management will present an overview of the Morphic Global Opportunity Fund on Thursday 16th May 2013, which he describes as being, "Global with a long equity bias and a macro overlay".
Morphic's philosophy is summarised by the view that only funds with flexible hedging strategies will be able to deliver acceptable, steady, real, absolute returns for investors over the investment cycle. The latest copy of our Research Review of the Fund is here.
Jack will share his views on the outlook for the global economy and markets. He recently returned from Japan and will give us some insights into the changes in markets and sentiment since Prime Minister Abe's election.
Thursday 16th May 2013 at 12:30pm
Sydney city venue to be advised
RSVP by Monday 13th May 2013
If you are interested in attending this "Meet the Manager briefing", please reserve your seat and we will send you confirmation of your registration by return email.
Morphic Fund Review March 2013 (pdf format)
14 May 2013 - Morphic Global Opportunities Fund
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| Manager Comments | The Fund’s top stock contributors this month came mostly from Japan, led by long term holdings in HR services outsourcing company Relo and lease financer Century Tokyo. Also helping in Japan were Karaoke equipment maker Daiichikosho and two baskets, comprising three Japanese drug stores and two Japanese tyre producers. A recent Japanese purchase, low cost home builder Arnest One also achieved high returns, although this was partly offset by a short position in two other home builders established to hedge the exposure. Other positive contributions came from Korean cable shopping network GS Home Shopping, Turkish steel producer Kardemir, a collection of US financials, and a long-short Macau gaming stock position. Most of the underperformance in the Fund was due to long positions in two individual stocks, a basket of commodity related investments and partial reversals in previous gains on a handful of unpaired short positions. Shorting proved difficult in a month with such a strong underlying surge in global markets. The Manager closed out all its short equity positions other than the long-short pairs set up for hedging purposes mentioned above, but only after reporting losses that eroded somewhat previously profitable trades in a Hong Kong retailer and a pair of European power generators. From a macroeconomic perspective, the month saw a tug-of-war between deteriorating economic data battling investor optimism caused by expanded global money printing. Liquidity would appear to have the upper hand so far. The Manager expects this to persist and has slightly lifted Fund exposures to emerging market and commodities. However confidence remains fragile and vigilance is required for any sign this stance requires review. The Fund remains un-hedged into Australian dollars. |
| More Information | » View detailed profile of this fund |
13 May 2013 - Monash Absolute Investment Fund
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| Fund Overview | The Fund places a high priority on capital preservation, and have an absolute return focus in accepting market risk. The Manager employs a comprehensive approach to making investment decisions utilising value, growth and discounted cash flow styles. The portfolio is somewhat concentrated and the manager looks to diversify the portfolio across industries and themes rather than staying near an index. The portfolio may at times have a large amount of cash or other protection. |
| Manager Comments | The manager has commented on the following investments; G8 Education (GEM) continued to climb. This month it was up another +16.3%. GEM owns and operates 167 childcare centres in Australia and has interests in another 69 centres in Singapore. Exiting the Flight Centre / Wotif pairs trade (FLT/WTF). Despite a rising market for industrial cyclicals the Fund managed to make money from shorting Wotif, which dropped -2.7% while invested and also made money from owning Flight Centre which rose and made +4.6% over the same period. Southern Cross Electrical Engineering (SXE) was down -15.9%, getting caught in the fall with all mining services companies and resource companies generally. At the end of the month the portfolio had nine Outlook Driven stocks, seven Event Driven stocks and one Pairs Trades. Gross exposure was 69% and net exposure was 67%. |
| More Information | » View detailed profile of this fund |
10 May 2013 - Hedge Clippings
Based on 31% of single funds' results reported to date, AFM's index of absolute return and hedge funds returned 2.19% in April, to take year to date performance to +6.15%, and 12 month performance to 9.89%. Equity based funds have outperformed the broader average, up 2.27% in April, 7.41% YTD, and 12.22% over the past 12 months.
By comparison, the ASX200 accumulation index rose 4.54% in April, 12.99% YTD and 23.58% over 12 months.
As far as spread, or range of returns is concerned, the sector returns of the ASX provided some clue as to fund returns, particularly those focusing on the resources, and more specifically the small resources sector. The ASX Smallcap Resources Accumulation Index fell for the seventh consecutive month, with a fall of 20% in April alone, its third largest fall since inception in 1995 with gold stocks particularly affected.
As a result, the spread of fund returns for the month was wider than usual, ranging from -22% through to +22%, although 90% of results to date have been positive. The performance spread over the past year also ranges widely, from -57% through to +58%, again reinforcing the importance of strategy and fund selection. Full details are available on our index pages.
Next Tuesday sees the handing down of the federal budget, the last in the term of this parliament, and the last prior to the election in September. The Prime Minister and Treasurer have both been at pains to prepare everyone for bad news and a significant deficit, having been equally strident until comparatively recently that everything in the garden was rosy. With apologies to Abraham Lincoln, "you can fool all of the people some of the time, some of the people all of the time, but you can't fool yourself forever".
So while the pain has been flagged, the medicine has yet to be prescribed. What is interesting is that short of a miracle, neither the PM or Treasurer will be around to administer the dosage.
Meanwhile yesterday the (current) Minister for Superannuation, Bill Shorten announced his plan to establish a Council of Superannuation Custodians with the intention it would oversee a "Charter of Superannuation Adequacy and Sustainability". That all sounds well and good, but where was the Council over the past 5 years as the rules affecting Super have been chopped and changed with monotonous regularity?
Performance and News Updates on www.fundmonitors.com this week:
The Bennelong Kardinia Absolute Return Fund recorded 1.34% for April 2013 bringing since inception (May 2006) performance to 14.47% pa. We also released the latest Fund Review for April 2013, which you may read here.
Platinum Japan Fund had an exceptional April 2013 with a performance of 13.75%, well ahead of its benchmark and bringing the six month return to 45.83%.
The Bennelong Long Short Equity Fund had a flat month in April 2013 recording a return of 0.01% bringing their since inception return (January 2003) to 20.16%. Their most recent Fund Review for April 2013, is here.
Aurora Fortitude Absolute Return Fund had a sound April 2013 with a return of 1.68% bringing the twelve month return to 5.24%. The Fund's volatility is notable at 2.84% annualised since inception.
The CSAG Long Only Program delivered -0.16% for the month and -4.39% for the year to end March 2013.
Continuing our successful Meet the Manager presentation series, on Thursday 16 May, AFM is holding a city lunch time briefing featuring Jack Lowenstein from Morphic Asset Management. The Morphic Global Opportunities Fund is a global equity long/short manager with a macro-economic overlay. The Fund's portfolio construction has a long bias and favours value based and momentum strategies, with a strong emphasis on risk management. If you would like to join us for the presentation, please reply to this email.
And finally, for something completely different, short and sweet this week.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
10 May 2013 - Aurora Fortitude Absolute Return Fund
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| Manager Comments | Investors searching for dividend income aggressively bought Finance, Telco and Consumer related companies which resulted in a 6.7% rally in the All Industrials Index. Ongoing concerns regarding slowing Chinese growth and the impact on commodity prices saw the All Resources Index fall 3.7%. The net result was a 4.5% return for the S&P/ASX 200 Accumulation Index. The most significant contribution (0.77%) came from the recovery in the Australian Infrastructure Fund. The fund released an update on the completion of asset sales and the timing of capital returns to unit holders. A standout among larger resources companies was the 8.3% total return from Woodside Petroleum. This was largely in response to the announcement of a special dividend and increased dividend payout ratio which was music to the ears of yield hunters. There continues to be some supply of short dated hybrid instruments as investors continue to switch into new issues and ordinary shares. The manager continues to seek alpha in this area with the knowledge that returns will accelerate as maturity approaches. |
| More Information | » View detailed profile of this fund |
9 May 2013 - Bennelong Long Short Equity Fund
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| Manager Comments | Global equity markets had a strong month in April, fuelled mainly by the Bank of Japan’s announcement of a massive expansion of money supply in an effort to stimulate inflation. The S&P/ASX 200 got caught up in the excitement and ended up 4.5%. The focus of the local market rally was primarily dividend yield which drove Telcos up 10%, Financials up 9%, REITs up 8% and Staples up 7% whilst Resources were sold off heavily. Gains in Health Care and Consumer Staples were equally offset by losses in Consumer Discretionary and Utilities. The Fund's long portfolio was up over 6% for the month but the short portfolio losses neutralised the net position. This was a disappointing outcome as the fund continues to be impacted by exogenous factors rather than fundamental factors. The manager is conscious that some investors have disregarded the equity risk premium concept resulting in valuation premiums in some stocks being unjustified in the manager's opinion. Further the manager regards the current market conditions as challenging for fundamental investors but expects that the Fund have by now withstood the majority of thematic headwinds and expect an element of reversion to be forthcoming, enabling the Fund to regain lost ground. Locally, the economy is marked by weak business and consumer confidence which is reflected in some recent downgrades and softer outlook commentaries. Equity markets are looking through FY 2013 earnings and the market is starting to see some earnings softness occurring in the FY 2014 outlook. |
| More Information | » View detailed profile of this fund |
8 May 2013 - Platinum Japan Fund - AUD
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| Manager Comments | The Fund holdings were 85.6% Japan, 3.4% Korea (net) and 11.0% cash with 50.4% of the Fund hedged back into $US. By sector the largest holdings were in Industrials 23.7%, Consumer Discretionary 21.6% and Financials 11.5%. Lowest sector holding was in consumer staples at 2.4%. The three largest holdings were Toyota, SBI Holdings (Telecomms) and Mitsubishi UFJ. |
| More Information | » View detailed profile of this fund |
7 May 2013 - Fund Review: Bennelong Kardinia Absolute Return Fund
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review on the Bennelong Kardinia Absolute Return Fund.
We would like to highlight the following aspects of the Fund:
- Kardinia is a boutique Australian based Fund Manager established in August 2011 in conjunction with the Bennelong Group to continue the management of the Herschel Absolute Return Fund.
- Long biased, research driven, active equity long/short strategy investing in listed ASX companies with a six year track record and an annualised return of 14% net of fees.
- Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.
- Consistent top decile long short equity sector performance. Key Performance and Risk Statistics indicate an attractive risk/reward profile, and a strong focus on capital protection in negative markets.
Research and Database Manager
Australian Fund Monitors
Fund Review: Bennelong Kardinia Absolute Return Fund (pdf format)
