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Printed: 07 July 2022 11:57 PM


13 Jul 2021 - Performance Report: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors

Report Date13 July 2021
ManagerKardinia Capital, a Bennelong boutique
Fund NameBennelong Kardinia Absolute Return Fund
StrategyEquity Long/Short
Latest Return DateJune 2021
Latest Return-0.89%
Latest 6 Months1.46%
Latest 12 Months11.65%
Latest 24 Months (pa)3.99%
Annualised Since Inception8.57%
Inception Date01 May 2006
FUM (millions)AU$39
Fund OverviewThe Fund consists of a concentrated long/short portfolio typically comprising 20 to 50 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. On average since inception the Fund's exposure has averaged 40% net long. There is a slight bias to large cap stocks on the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position.

The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria.

Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing.

A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk.
Manager CommentsThe Bennelong Kardinia Absolute Return Fund returned -0.89% in June. Over the past 12 months the fund has returned +11.64%. Since inception in May, 2006, the fund has returned +8.57% per annum, a difference of +1.93% vs the index which has returned +6.64% over the same period.

Since inception the fund's volatility has been 7.64% vs the index's volatility of 14.28%, and over all other time periods the fund's volatility has been lower than the ASX 200 Total Return index.

Since inception in the months when the market was positive the fund provided positive returns 87% of the time. It has a down-capture ratio of 48.66% since inception and has experienced a maximum drawdown of -11.71% compared with the index's -47.19%.
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