PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND

Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.

• The Pengana Absolute Return Asia Pacific Fund ("PARAP") was established in 2008 by portfolio managers Antonio Meroni and Vikas Kumra. The Fund is a feeder fund into a Cayman Islands AUD share class fund.
• The Fund invests both long and short in Asia Pacific equities, including in Australian and New Zealand, after a stock specific "event" has either occurred or been announced and the portfolio aims to be uncorrelated to the underlying equity markets. A combination of the Manager's experience, thorough research and continuous back- testing identify the most attractive of these events.
• Risk controls include limits on individual positions as well as gross and net exposure. Limits are in place for option exposure and cash borrowing, with stop loss limits on individual positions. Overall the manager is looking to derive returns from the event strategies as opposed to any currency or market exposures.
• Since inception, the Fund has an annualised return of 8.56% p.a., compared to the MSCI ACWI Asia Pacific Price Index's return of 2.86% p.a.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - December 2016 (pdf format)

OPTIMAL AUSTRALIA ABSOLUTE TRUST

AFM have released the most recently updated Fund Review on the Optimal Australia Absolute Trust.

We would like to highlight the following aspects of the Fund;

• Optimal Australia is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200. 

• The investment team comprising George Colman, Peter Whiting, and Stephen Nicholls bring nearly 100 years combined experience in equity markets.

• In October, the Fund rose 0.29% in December, to take annualised return since inception to 8.54% p.a. The Fund's approach to risk is shown by the Sharpe ratio of 1.39 (Index 0.25), Sortino ratio of 2.92 (Index 0.24), both of which are well above the ASX 200 Accumulation Index and has recorded 80% positive months.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - December 2016 (pdf format)

So long 2016: Welcome 2017 but stay on your toes!

Firstly, Happy New Year from Hedge Clippings. We trust you have had a relaxing and peaceful break and, depending where in the world you are, have survived the extremes of temperature. From our perspective in Sydney it has been hot and humid which, while not unusual for this time of the year, seems to have been more so than usual.

And so goodbye to 2016. Judging by the comments received from many over the past few weeks there aren't too many who were sad to see the back of it. It was certainly a turbulent year from a political point of view, and depending on one's leanings, either very satisfactory or very disappointing. Brexit, the potential for which was only brought to our attention 12 months ago, although done and dusted has a long way to run, longer certainly than most of the proponents originally envisaged.

Meanwhile, tonight sees the inauguration of probably the most unexpected (at least from an outsider's point of view) of US Presidents in memory. Looking back over our commentaries of the past 12 months it would be fair to say we misjudged the mood of middle America, as did most of those on the east and west coast. To what extent President Trump will be able to bring the disbelievers along with him on his journey of 'Making America Great Again' remains to be seen but is certainly going to make for interesting, and turbulent times.

Turbulent probably also describes Australia's equity markets in 2016. It's fair to say that they started the year with a whimper, falling 10% in the first two months, only to end the year with a roar, rising 8% in the last two months, and as pointed out by George Colman of Optimal Australia, rising 13.1% between November 9 and January 9 this year.  Furthermore in the three weeks from December 19 only three stocks in the ASX 100 lost ground.

Going forward it is probably fair to say that, with valuations at current levels and earnings still uncertain, there is plenty of room for volatility. And whilst on the subject of volatility and earnings, woe betide any company missing expectations or disappointing investors.

From a fund manager's perspective, it was also a tough year. With 70% of AFM's database reported, only 11% outperformed the ASX 200 Accumulation Index. Many proven, tried and tested funds found it difficult to negotiate and navigate both political and earnings uncertainties over the year, particularly the strength of the last two months. For many, it will go down as a forgettable year, and probably one in which the marketers will be reminding investors that its a longer term game.

On the other hand, there were some excellent performances particularly from new and smaller managers, and those investing outside the top 100, who benefited from the ability to select outstanding companies, and profit accordingly. We look forward to bringing you information, news and research on these, and others, over the coming 12 months.

PERFORMANCE NEWS 

Over the last 12 months, the S&P/ASX 200 Total Return Index returned +11.80%, the MSCI Asia Pacific Ex-Japan Index returned +9.49% and the S&P 500 Total Return Index returned +14.77%.

Allard Investment Fund rose 0.57% in December (MSCI Asia Pacific ex-Japan A$ +1.28%). The Fund has returned 9.25% over the past 12 months, taking annualised return since inception to 9.02% p.a.

The Paragon Australian Long Short Fund returned +0.80% in December, +6.82% for the latest 12 months and since inception, the fund has an  annualised return of 15.11% p.a. 

Totus Alpha Fund returned +2.74% in December and -14.25% for the latest 12 months. Since inception in April 2012, the Fund has an annualised return of 21.02% p.a.

Bennelong Kardinia Absolute Return Fund gained 1.45% in December, however, fell -2.44% for the most recent 12 months. 2016 marked the first negative year for the Fund since inception in May 2006, taking the annualised return to 11.22% p.a.

Optimal Australia Absolute Trust returned +0.29% in December 2016 and +4.75% for the latest 12-months. The Fund has not recorded a negative year since inception in September 2008 and has an annualised return of 8.54% p.a.

Touchstone Index Unaware Fund generated +4.42% in December, slightly ahead of the market rise of 4.38% (S&P/ASX 200 Accumulation Index). Since inception in April 2016, the Fund has returned +14.24%.

Cyan C3G Fund returned -1% in December, taking the most recent 12 months return to 14.79%. Since inception in August 2014, the Fund has an annualised return of 27.15% p.a.

Affluence Investment Fund increased 1.08% in December resulting in a +10.65% return for the 2016 calendar year, and 10.01% p.a. annualised returns.

APN AREIT Fund increased 6.80% in December, taking the prior 12 months performance to +13.73%. Since inception in February 2009, the annualised return for the Fund is 17.22% p.a.

Pengana Absolute Return Asia Pacific Fund finished up +0.37% for December 2016, marking the first negative year for the Fund, returning -2.10%. Since inception, the Fund has an annualised return of 8.56% p.a.

KIS Asia Long Short Fund returned -0.42% in December, taking the return for the most recent 12 months to +13.46%. The Fund has an annualised return of 14.63% p.a. since inception in October 2009.

Bennelong Long Short Equity Fund returned -3.23% in December taking the latest 12 months to -13.07%, in a rare negative year over 15 years of history. Since inception in February 2002, the annualised return for the Fund is 16.14% p.a.

FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.