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18 Nov 2021 - Performance Report: Paragon Australian Long Short Fund

By: Australian Fund Monitors

Report Date18 November 2021
ManagerParagon Funds Management
Fund NameParagon Australian Long Short Fund
StrategyEquity Long/Short
Latest Return DateOctober 2021
Latest Return-3.64%
Latest 6 Months8.46%
Latest 12 Months57.50%
Latest 24 Months (pa)34.84%
Annualised Since Inception15.36%
Inception Date28 February 2013
FUM (millions)AU$60.7
Fund OverviewThe Paragon Fund is a concentrated long/short Australian listed equities product that is fundamentally driven with a focus on the industrial and resource sectors.

Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks.

Conviction in bottom up analysis drives the investment case and ultimate position sizing:

* Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case.
* Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework.

The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market.
Manager CommentsThe Paragon Australian Long Short Fund has risen +57.50% over the past 12 months, outperforming the ASX200 Total Return Index by +27.96%.

The Paragon Australian Long Short Fund has a track record of 8 years and 9 months and has consistently outperformed the ASX 200 Total Return Index since inception in March 2013, providing investors with a return of 15.36%, compared with the index's return of 8.64% over the same time period.

On a calendar basis the fund has had 1 negative annual return in the 8 years and 9 months since its inception. Its largest drawdown was -45.11% lasting 2 years and 7 months, occurring between January 2018 and August 2020 when the index fell by a maximum of -26.75%.

The Manager has delivered higher returns but with higher volatility than the index, resulting in a Sharpe ratio which has fallen below 1 five times and currently sits at 0.65 since inception. The fund has provided positive monthly returns 69% of the time in rising markets, and 46% of the time when the market was negative, contributing to an up capture ratio since inception of 113% and a down capture ratio of 77%.
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