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Index Selector Link | 1 Year | 3 Year | 5 Year |
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-9.35% |
9.84% |
6.60% |
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-10.20% |
-0.88% |
-0.04% |
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-4.40% |
7.21% |
6.18% |
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-5.91% |
6.30% |
6.09% |
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-11.68% |
2.56% |
2.97% |
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-4.12% |
6.02% |
7.11% |
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-18.20% |
4.02% |
7.10% |
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-23.30% |
2.14% |
5.38% |
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-19.34% |
5.02% |
6.65% |
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-6.45% |
-0.86% |
1.10% |
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-2.98% |
1.66% |
2.94% |
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5.31% |
6.72% |
7.15% |
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4.20% |
5.37% |
5.29% |
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0.89% |
2.40% |
6.80% |
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-5.11% |
3.61% |
3.62% |
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-6.75% |
5.08% |
7.61% |
Hedge Clippings
Firstly, good riddance to 2022, which for most investors and the majority of fund managers was a year they'd happily forget.
20 Jan 2023 - Hedge Clippings |20 January 2023
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Hedge Clippings | Friday, 20 January 2023 Welcome to the first edition of Hedge Clippings for 2023. Firstly, good riddance to 2022, which for most investors and the majority of fund managers was a year they'd happily forget. The cause of most of the damage was the sharp increase in interest rates, triggered in turn by an outbreak of inflation, as noted by L1 Capital in their December performance report:
The last sentence reveals why so many funds struggled in 2022. No one expected an inflationary break out, thus market expectations - including those of central banks - for rates rises were subdued, to say the least. Throw in the unexpected invasion of Ukraine in February, plus turmoil in China, and it's easy to see why only 29% of the 700+ funds in the FundMonitors database, (including the above mentioned L1 Capital's Global Long Short Fund which returned 9.8%) provided positive returns for the year, and less than a quarter of all equity funds managed to outperform the ASX 200 Accumulation Index. Put bluntly, central banks, including our own RBA, and economists were caught looking in the wrong direction, and thus fund managers had to readjust to the new environment, which by the last quarter of the year many had managed to do. The ASX fared better than most global markets, falling 1.08% on an accumulation basis, while the S&P500 was down 18%, and the NASDAQ fell 33%. Unusually in times of equity market turmoil, bond markets didn't provide a safe haven. Looking forward, it seems inflation, while still a major issue, may have peaked in the last quarter of 2022, particularly in the US where it dropped to 6.45% in December, down from 9.06% in June. Meanwhile, in the UK the December annual inflation figure was 10.5%, down slightly from 10.7% the previous month. That may allow central banks to ease off on further rate rises, but we are unlikely to see rates fall until much later in the year, by which time the looming recession will have been confirmed. So while the path ahead is not going to be easy, and is still uncertain, hopefully, there are less unknowns: The war in Ukraine will drag on, and hopefully not escalate further. China remains a 50/50 bet, although a far cry from the economic and political juggernaut it seemed to be a couple of years ago. COVID, whilst remaining a threat thankfully seems to be receding or at least becoming more manageable. Of course, thinking that the bad news is already out there is dangerous - the unexpected is always just around the corner. But compared to this time last year, surely markets are more prepared for what might lie ahead? |
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News & Insights Market Commentary | Glenmore Asset Management Market Update | Australian Secure Capital Fund December 2022 Performance News Glenmore Australian Equities Fund Argonaut Natural Resources Fund 4D Global Infrastructure Fund (Unhedged) Insync Global Quality Equity Fund Bennelong Long Short Equity Fund Quay Global Real Estate Fund (Unhedged) |
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27 Jan 2023 - Performance Report: Argonaut Natural Resources Fund
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Fund Overview | Argonaut Natural Resources Fund ('ANRF') is an actively managed wholesale fund investing in listed resource and mining service companies. ANRF seeks to create a diversified portfolio of investments which will generate absolute returns in excess of the S&P ASX 300 Resources Index. The Fund typically holds between 10 and 25 separate equity investments. Its portfolio is built around a rigorous investment process that assesses Market conditions and Macro economic influences, then conducts detailed Micro stock specific analysis. At times, ANRF may consider holding higher levels of cash (max 30%) if valuations are full and it is difficult to find attractive investment opportunities. The Fund does not borrow for investment or any other purposes, but it may short sell securities as part of its portfolio protection strategies. |
Manager Comments | The Argonaut Natural Resources Fund has a track record of 3 years and therefore comparison over all market conditions and against its peers is limited. However, the fund has outperformed the ASX 200 Total Return benchmark since inception in January 2020, providing investors with an annualised return of 42.35% compared with the benchmark's return of 5.55% over the same period. On a calendar year basis, the fund hasn't experienced any negative annual returns in the 3 years since its inception. Over the past 12 months, the fund's largest drawdown was -19.06% vs the index's -11.9%, and since inception in January 2020 the fund's largest drawdown was -19.06% vs the index's maximum drawdown over the same period of -26.75%. The fund's maximum drawdown began in April 2022 and lasted 7 months, reaching its lowest point during June 2022. The fund had completely recovered its losses by November 2022. During this period, the index's maximum drawdown was -11.9%. The Manager has delivered these returns with 3.51% more volatility than the benchmark, contributing to a Sharpe ratio which has only fallen below 1 once over the past three years and which currently sits at 1.66 since inception. The fund has provided positive monthly returns 83% of the time in rising markets and 33% of the time during periods of market decline, contributing to an up-capture ratio since inception of 200% and a down-capture ratio of 39%. |
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27 Jan 2023 - Performance Report: Bennelong Emerging Companies Fund
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Manager Comments | The Bennelong Emerging Companies Fund has a track record of 5 years and 2 months and has outperformed the ASX 200 Total Return benchmark since inception in November 2017, providing investors with an annualised return of 16.55% compared with the benchmark's return of 7.58% over the same period. On a calendar year basis, the fund has experienced a negative annual return on 2 occasions in the 5 years and 2 months since its inception. Over the past 12 months, the fund's largest drawdown was -25.64% vs the index's -11.9%, and since inception in November 2017 the fund's largest drawdown was -41.74% vs the index's maximum drawdown over the same period of -26.75%. The fund's maximum drawdown began in December 2019 and lasted 10 months, reaching its lowest point during March 2020. The fund had completely recovered its losses by October 2020. The Manager has delivered these returns with 13.94% more volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 five times over the past five years and which currently sits at 0.64 since inception. The fund has provided positive monthly returns 80% of the time in rising markets and 29% of the time during periods of market decline, contributing to an up-capture ratio since inception of 251% and a down-capture ratio of 120%. |
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27 Jan 2023 - The net-zero journey: creating a just transition for workers
The net-zero journey: creating a just transition for workers abrdn December 2022 A 'just transition' refers to the way the world transitions to low-carbon energy sources. It is a crucial part of the climate agenda. A just transition aims to minimise adverse impacts from the energy transition and to see everyone share its benefits - including workers, suppliers, communities and consumers. The journey to net zero will have uneven effects across industries and countries. One key aim of a just transition is to support vulnerable workers by creating green, high-quality jobs and helping equip workers with the skills necessary for achieving net zero. Net job impactsThe prevailing view is that the transition to a net-zero economy would lead to more job gains than job losses. According to McKinsey's calculation based on a net-zero 2050 scenario, the transition could create around 200 million jobs and displace around 185 million jobs. This could result in a net impact of around 15 million more jobs by 2050.1 These job gains include around 162 million jobs in operations and maintenance across different sectors of the economy, and around 41 million jobs associated with spending on physical assets needed for the net-zero transition by 2050. The International Labour Organisation (ILO) paints an even more positive picture, estimating that a net increase of 18 million jobs by 2030 is possible.2 What sectors and countries will be most affected?According to the ILO, most of the job creation that results from the energy transition will happen in construction, electrical machinery manufacturing, copper mining, renewable energy production, and biomass crop cultivation. Most of the job losses will occur in petroleum extraction and refinery, coal mining, and thermal coal. In addition, the shift to electric vehicles will require fewer workers for production, leading to net job losses - something that is already happening within the sector. The impact on jobs also varies by country, depending on its economic exposure to the net-zero transition. The transition would unevenly affect lower-income and fossil-fuel-producing countries, such as Pakistan, India, Bangladesh, Kenya, Nigeria and Indonesia. How companies manage the impacts of the transition on their workforce will pose considerable investment risks and opportunities for investors These tend to be countries with a relatively higher proportion of jobs, gross domestic product and capital stock in sectors that are more exposed to the transition - that is, sectors with emission-intensive operations, products and supply chains. Significant fossil-fuel resource production also creates high exposure for some countries, such as Qatar, Russia and Saudi Arabia. Investment implicationsHow companies manage the impacts of the transition on their workforce will pose considerable investment risks and opportunities for investors. There are two types of risks facing companies within the sectors that are most exposed to the energy transition: restructuring risks and human-capital risks. Firstly, when it comes to restructuring risks, the most obvious of these is operational disruption caused by mass redundancies. This can lead to costly pay-outs and challenging labour relations. Research shows that the top performers with higher restructuring management practices tend to be concentrated in Europe. This is also the case for companies within the fossil-fuel and emission-intensive sectors, which indicates that European companies are relatively more prepared for a just transition. Secondly, human-capital risks mainly manifest as skills mismatches and shortages, which can impede a company's progress on the green transition. According to the International Energy Agency (IEA), the energy sector already faces difficulty hiring qualified talent to keep pace with the growth in clean energy. If solar and wind installations reach four times today's annual level by 2030, as called for in the IEA's net-zero scenario, these labour constraints could impede the world's ability to accelerate the shift to a low-carbon future.3 According to the ILO's survey, while most countries have environmental policies, there are only a handful of countries with corresponding policies at either the national or the regional level for skills development. These are Denmark, Estonia, France, Germany, the UK, the US, China, India, South Korea, the Philippines and South Africa. Similarly, few countries have incorporated skills for the green transition into the formal vocational training curriculum.4 Companies also have an important role to play in identifying and anticipating skills, and in providing access to jobs and training for the green transition. In practice, this can be done in partnership with the government and educational organisations. Investors need to understand how these risks are being managed. For example, through our own extensive engagement with auto makers, we have learned that the industry is managing these risks through early retirement schemes, upskilling of the existing workforce, and proactive engagement with trade unions. In general, to understand how companies are managing these risks, investors can focus on four key indicators:
ConclusionThe energy transition will have a significant impact on employment. It will lead to the creation and displacement of millions of jobs. While the overall net impact is likely to be positive, the projected job gains will concentrate in sectors like renewable energy, electrical machinery and construction. From a geographical perspective, a higher level of disruption to the labour market is expected in developing countries that rely heavily on fossil-fuel and emission-intensive sectors. How companies and governments manage these impacts will present risks and opportunities for investors. Our ongoing research and engagement aim to understand the social impacts and potential risks to our investments from the energy transition. Our research in this area is expected to expand and grow in the future, in conjunction with our ongoing climate change, human rights, and labour and employment work. For example, building on our focus on workers in the energy transition, we will also consider the perspectives of communities and consumers, in order to integrate further insights into our investment process. Author: Ziggy You, Sustainability Analyst and Elizabeth Chiwashenga, Senior Sustainability Analyst |
Funds operated by this manager: Aberdeen Standard Actively Hedged International Equities Fund, Aberdeen Standard Asian Opportunities Fund, Aberdeen Standard Australian Small Companies Fund, Aberdeen Standard Emerging Opportunities Fund, Aberdeen Standard Ex-20 Australian Equities Fund (Class A), Aberdeen Standard Focused Sustainable Australian Equity Fund, Aberdeen Standard Fully Hedged International Equities Fund, Aberdeen Standard Global Absolute Return Strategies Fund, Aberdeen Standard Global Corporate Bond Fund, Aberdeen Standard International Equity Fund , Aberdeen Standard Life Absolute Return Global Bond Strategies Fund, Aberdeen Standard Multi Asset Real Return Fund, Aberdeen Standard Multi-Asset Income Fund 1. The net-zero transition: Its cost and benefits | Sustainability | McKinsey & Company |
25 Jan 2023 - Performance Report: Skerryvore Global Emerging Markets All-Cap Equity Fund
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Fund Overview | The strategy is index unaware and is based on a focus on the quality of the businesses in which the Fund invests. The Skerryvore investment team select individual stocks based on their merit and without reference to the composition of the Benchmark. The Manager's country and sector allocations reflect the active bottom up investment approach of the Skerryvore team. The Fund also invests in companies that are incorporated and listed in developed market countries which have economic exposure to emerging markets. The difference in allocation against any emerging markets index can be significant. |
Manager Comments | The Skerryvore Global Emerging Markets All-Cap Equity Fund has a track record of 1 year and 5 months and therefore comparison over all market conditions and against its peers is limited. However, the fund has outperformed the MSCI Emerging Markets (MMEF) AUD benchmark since inception in August 2021, providing investors with an annualised return of -5.45% compared with the benchmark's return of -6.47% over the same period. Over the past 12 months, the fund's largest drawdown was -13.9% vs the index's -20.81%, and since inception in August 2021 the fund's largest drawdown was -17.45% vs the index's maximum drawdown over the same period of -21.92%. The fund's maximum drawdown began in September 2021 and has so far lasted 1 year and 3 months, reaching its lowest point during June 2022. The Manager has delivered these returns with 2.92% less volatility than the benchmark, contributing to a Sharpe ratio for performance over the past 12 months of -0.68 and for performance since inception of -0.58. The fund has provided positive monthly returns 86% of the time in rising markets and 30% of the time during periods of market decline, contributing to an up-capture ratio since inception of 56% and a down-capture ratio of 70%. |
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25 Jan 2023 - Performance Report: Cyan C3G Fund
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Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that fit one or more of the following criteria: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage performance. However, companies in which the Fund invests may be leveraged. |
Manager Comments | The Cyan C3G Fund has a track record of 8 years and 5 months and has outperformed the ASX Small Ordinaries Total Return benchmark since inception in August 2014, providing investors with an annualised return of 6.09% compared with the benchmark's return of 5.79% over the same period. On a calendar year basis, the fund has experienced a negative annual return on 2 occasions in the 8 years and 5 months since its inception. Over the past 12 months, the fund's largest drawdown was -37.97% vs the index's -20.77%, and since inception in August 2014 the fund's largest drawdown was -45.18% vs the index's maximum drawdown over the same period of -29.12%. The fund's maximum drawdown began in November 2021 and has so far lasted 1 year and 1 month, reaching its lowest point during September 2022. During this period, the index's maximum drawdown was -24.24%. The Manager has delivered these returns with 0.84% more volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 five times over the past five years and which currently sits at 0.35 since inception. The fund has provided positive monthly returns 83% of the time in rising markets and 34% of the time during periods of market decline, contributing to an up-capture ratio since inception of 54% and a down-capture ratio of 82%. |
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25 Jan 2023 - Cashflow pothole in energy transition journey
Cashflow pothole in energy transition journey Yarra Capital Management December 2022 By now, people whose eyes don't immediately glaze over once discussions of personal or national budget are broached are well aware of an upcoming spike in their electricity and gas bills. However, for the majority of the Australian citizenry the 'sticker shock' from the increase in utility bills will still be felt in real time. Tim Toohey, Head of Macro and Strategy, details why for many Australians this will merely compound an already dire cashflow situation. For context, the Australian Treasury has assumed that electricity prices will rise 20% (y/y) by late 2022 and a further 30% in 2022-23. This will take utilities to an unprecedented share of wallet in 2023, some 2.6% of household income by Dec 2023 (refer Chart 1). While that may not sound like a particularly scary figure, it's 25% above the 10-year average and 49% above the long run average dating back to 1960. It will also represent the biggest one year rise in utility bills in the post-War period. The cause for the spike has been well documented. A surge in global coal and energy prices in reflex to the invasion of the Ukraine was the dominate force, some unfortunate timing of coal-fired power station maintenance and some less than transparent behaviour by market participants all played a role. Yet the cause of the trend rise in utility costs is less well understood at the household level; the rapid transition to renewables is unravelling the economics of running coal and gas-fired generation at an even more rapid rate. This is not to say that decarbonising the grid in an expeditious manner is not necessary or desirable. It merely means that the cost of the transition will be felt well beyond well-heeled investors asked to dig deep into their pockets to finance the capital cost of the transition. Indeed, it is the consumer that will invariably be forced to pay for the potholes in the road to decarbonisation as firms seek to recover the cashflow hit from declining economics of traditional generation via higher power bills. Utility companies know this. Politicians should know this. Households largely have no idea that they are ultimately on the hook if best intentions of a smooth energy transition turn to custard somewhere along the journey. To overwork the analogy, we have barely gotten the car out of the driveway with a long journey ahead to a known destination but without a clear map of how to get there. We don't have enough cash in our wallet to complete the journey, some of the roads have not yet been built, and the kids who have been fighting politically for years before getting in the car are continuing to do battle in the backseat. For those of us scarred from family car trip holidays at this time of year, we are collectively at the point where optimism and excitement at the start of a trip are about to be overwhelmed by the reality of a long-haul car trip in the Australian heat. The feeling of sizzling hot car seats, the taste of Aerogard inadvertently sprayed into a protesting mouth and the injustice as youthful back seat rebellion is brutally supressed by the front seat elites. Yes, it's going to be a long and painful journey. But to get a sense of who will bear more of the cost, we can look at the average quarterly electricity bill across different dimensions. By household size (refer Table 2), the more children you have the greater the power bill increase (and the more time the parent spends wandering around the house turning off lights left on by their children). By age, it's the young that will feel the pain more acutely (refer Table 3). Indeed, Gen Z (18-24yo) power bills will swamp the bills of Baby boomers (60+) by $150 p.a. Yes, despite the moral superiority of youth, it seems it takes more power to fuel video gaming sessions in the wee hours and to charge the armoury of devices required to keep your social media presence tip top! From the perspective of a top-down economist, the addition increment to inflation from rising power and gas bills could add 1.75% to inflation by the end of 2023 in first round impacts and potentially a further 0.35% in second round effects (Refer Table 4). That's a lot, but that's an average estimate. From the perspective of young households with multiple children living in the Eastern States, the impact will be larger and more painful. Worst still, this is the slice of the population that are most at risk of rising education, health, insurance and housing costs. We all know that the interest payments on the stock of existing total household debt are set to rise incredibly sharply in 2023, compounded by the roll off of fixed rate mortgages (refer Chart 2). In conjunction with principal payments, debt servicing for the average household is set to breach the prior record during 2023 (refer Chart 3). Again, this is for the average household. The situation for young mortgaged households is far more dire, not to mention a rising proportion of the recent new homeowners who are now entering negative equity scenarios for their homes. This will place an enormous impost on a large section of society. Nobody likes having their discretionary income squeezed and nobody likes an unexpected spike in their gearing ratio via falling asset prices. Even if we assume the ongoing robust growth in wages and employment in 2023 the impost of higher interest costs, utility costs, insurance costs and rents will be sufficient to see average discretionary cashflow fall by 15% by mid-2023 (refer Chart 4), and much more for young households with large families and large mortgages. Given, retail sales growth normally closely tracks our measure of discretionary cashflow, we expect that retail sales will slow from the rapid rate of close to 20%(y/y) to zero growth by mid-2023. Note, this is likely the best-case scenario. It could easily be worse if sub-trend economic growth reveals labour market weakness with a lag, as observable in all prior downturns. The argument that Australians have accumulated 'buffers' via $260bn in 'excess savings' since the pandemic and via pre-payments on mortgages will exceed additional interest payments - for most borrowers at least - is illusionary. While this might be true in an accounting sense, the RBA is likely asking itself the wrong question. It is not a question of how big a 'buffer' is before tightening policy will hurt, it is why did households accumulate such a buffer in the first place? And is the economic outlook improving or deteriorating? Excess fiscal stimulus obviously contributed to the initial saving spike, but what if the ongoing accumulation of savings was more about de-risking asset exposure in an uncertain time or because a large cohort of the population is simultaneously entering retirement (COVID may have expedited this decision for many Baby Boomers). If this is the case, then the 'excess saving' is not suggestive that a consumption boom lies ahead that threatens future inflation. Quite the opposite: in times of rising economic uncertainty households tend to initially lift their saving rate. They do not decrease it. There has been ongoing debate whether the government has a role to play in capping utility costs. And, if so, whether that should be at the company level or the consumer level. Given the recent history of firms profiteering through the crisis by lifting prices rather than absorbing margin pressure and the impending cashflow hit for households, the answer should be obvious. More importantly, if the government wants to keep everyone in the car playing nicely during the initial phase of the energy transition, then the answer is very much yes: utility costs need to be controlled. Let's just hope that there are enough fiscal resources and goodwill to get us to that new energy destination as quickly and efficiently as possible. Author: Tim Toohey, Head of Macro and Strategy |
Funds operated by this manager: Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund |
24 Jan 2023 - Performance Report: L1 Capital Long Short Fund (Monthly Class)
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Manager Comments | The L1 Capital Long Short Fund (Monthly Class) has a track record of 8 years and 4 months and has outperformed the ASX 200 Total Return benchmark since inception in September 2014, providing investors with an annualised return of 21% compared with the benchmark's return of 7.04% over the same period. On a calendar year basis, the fund has only experienced a negative annual return once in the 8 years and 4 months since its inception. Over the past 12 months, the fund's largest drawdown was -19.5% vs the index's -11.9%, and since inception in September 2014 the fund's largest drawdown was -39.11% vs the index's maximum drawdown over the same period of -26.75%. The fund's maximum drawdown began in February 2018 and lasted 2 years and 9 months, reaching its lowest point during March 2020. The fund had completely recovered its losses by November 2020. The Manager has delivered these returns with 6.39% more volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 four times over the past five years and which currently sits at 0.96 since inception. The fund has provided positive monthly returns 79% of the time in rising markets and 63% of the time during periods of market decline, contributing to an up-capture ratio since inception of 88% and a down-capture ratio of 22%. |
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24 Jan 2023 - Performance Report: Collins St Value Fund
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Fund Overview | The managers of the fund intend to maintain a concentrated portfolio of investments in ASX listed companies that they have investigated and consider to be undervalued. They will assess the attractiveness of potential investments using a number of common industry based measures, a proprietary in-house model and by speaking with management, industry experts and competitors. Once the managers form a view that an investment offers sufficient upside potential relative to the downside risk, the fund will seek to make an investment. If no appropriate investment can be identified the managers are prepared to hold cash and wait for the right opportunities to present themselves. |
Manager Comments | The Collins St Value Fund has a track record of 6 years and 11 months and has outperformed the ASX 200 Total Return benchmark since inception in February 2016, providing investors with an annualised return of 14.43% compared with the benchmark's return of 9.42% over the same period. On a calendar year basis, the fund has only experienced a negative annual return once in the 6 years and 11 months since its inception. Over the past 12 months, the fund's largest drawdown was -20.25% vs the index's -11.9%, and since inception in February 2016 the fund's largest drawdown was -27.46% vs the index's maximum drawdown over the same period of -26.75%. The fund's maximum drawdown began in February 2020 and lasted 7 months, reaching its lowest point during March 2020. The fund had completely recovered its losses by September 2020. The Manager has delivered these returns with 3.53% more volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 five times over the past five years and which currently sits at 0.78 since inception. The fund has provided positive monthly returns 83% of the time in rising markets and 62% of the time during periods of market decline, contributing to an up-capture ratio since inception of 72% and a down-capture ratio of 54%. |
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24 Jan 2023 - Performance Report: ASCF High Yield Fund
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Fund Overview | ASCF High Yield Fund provides short term 1st and/or 2nd mortgage loans to a maximum Loan to Valuation Ratio (LVR) of 80% for a maximum term of 12 months on residential and commercial property. Does not require full valuations on loans <65% LVR. Borrowing rates are from 12% per annum on 1st mortgage loans and 16% per annum on 2nd mortgage/caveat loans. Pays investors between 5.00% - 6.55% per annum depending on their investment term. |
Manager Comments | The ASCF High Yield Fund has a track record of 5 years and 10 months and has outperformed the Bloomberg AusBond Composite 0+ Yr benchmark since inception in March 2017, providing investors with an annualised return of 8.41% compared with the benchmark's return of 0.95% over the same period. On a calendar year basis, the fund hasn't experienced any negative annual returns in the 5 years and 10 months since its inception. Since inception in March 2017, the fund hasn't had any negative monthly returns and therefore hasn't experienced a drawdown. Over the same period, the index's largest drawdown was -12.97%. The Manager has delivered these returns with 4.12% less volatility than the benchmark, contributing to a Sharpe ratio which has consistently remained above 1 over the past five years and which currently sits at 17.08 since inception. The fund has provided positive monthly returns 100% of the time in rising markets and 100% of the time during periods of market decline, contributing to an up-capture ratio since inception of 76% and a down-capture ratio of -72%. |
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24 Jan 2023 - 10k Words
10k Words Equitable Investors December 2022 December's chart are largely lifted from an Equitable Investors slide deck. We can't really avoid taking a look at inflation and interest rates - so that is where we start with charts from Bloomberg showing the expectation for a sharp inflation correction in the US in 2023 (and a view on why based on Academy Securities' view of inflation drivers). Central bank policy rates remain, in the main, below inflation rates, as @charliebilello tabulates. CY2022 is almost gone and we can look back at capital markets and see sharp declines in the availability of funding - global equity capital raising volumes down 65% and Australasian down 54% year-on-year, using dealogic data. High yield debt issuance plunged even further. Crunchbase reckons that in global venture capital markets, seed funding dropped by a third, early stage halved and late stage is down by 80% compared to November 2021. Finally, Cliffwater shows us how private equity has outperformed since 2000 (in a period that coincides with historically low interest rates) and Refinitiv's Venture Capital Index gives us an idea of how alternative assets may have faired in 2022 if they were priced daily. Implied inflation (starts Dec 9) Source: Bloomberg Inflation Drivers (estimated) Source: Bloomberg, Academy Securities Global Central Bank Policy Rates (as of Dec 8, 2022) Source: Compound/@charliebilello Global Equity Capital Market Volumes ($USb)
Source: WSJ, Dealogic Australian Equity Capital Market Volumes ($USb) Source: WSJ, Dealogic High Yield Debt Capital Markets Source: WSJ, Dealogic Global Venture Capital Funding Source: Crunchbase Composite Private Equity Performance (US State Pensions) Source: Cliffwater Refinitiv Venture Capital Index Over 5 Years Source: FT December Edition Funds operated by this manager: Equitable Investors Dragonfly Fund Disclaimer Nothing in this blog constitutes investment advice - or advice in any other field. Neither the information, commentary or any opinion contained in this blog constitutes a solicitation or offer by Equitable Investors Pty Ltd (Equitable Investors) or its affiliates to buy or sell any securities or other financial instruments. Nor shall any such security be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. The content of this blog should not be relied upon in making investment decisions. Any decisions based on information contained on this blog are the sole responsibility of the visitor. In exchange for using this blog, the visitor agree to indemnify Equitable Investors and hold Equitable Investors, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to legal fees) arising from your use of this blog, from your violation of these Terms or from any decisions that the visitor makes based on such information. This blog is for information purposes only and is not intended to be relied upon as a forecast, research or investment advice. The information on this blog does not constitute a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Although this material is based upon information that Equitable Investors considers reliable and endeavours to keep current, Equitable Investors does not assure that this material is accurate, current or complete, and it should not be relied upon as such. Any opinions expressed on this blog may change as subsequent conditions vary. Equitable Investors does not warrant, either expressly or implied, the accuracy or completeness of the information, text, graphics, links or other items contained on this blog and does not warrant that the functions contained in this blog will be uninterrupted or error-free, that defects will be corrected, or that the blog will be free of viruses or other harmful components. Equitable Investors expressly disclaims all liability for errors and omissions in the materials on this blog and for the use or interpretation by others of information contained on the blog |
25 Jan 2023 - Cashflow pothole in energy transition journey
Cashflow pothole in energy transition journey Yarra Capital Management December 2022 By now, people whose eyes don't immediately glaze over once discussions of personal or national budget are broached are well aware of an upcoming spike in their electricity and gas bills. However, for the majority of the Australian citizenry the 'sticker shock' from the increase in utility bills will still be felt in real time. Tim Toohey, Head of Macro and Strategy, details why for many Australians this will merely compound an already dire cashflow situation. For context, the Australian Treasury has assumed that electricity prices will rise 20% (y/y) by late 2022 and a further 30% in 2022-23. This will take utilities to an unprecedented share of wallet in 2023, some 2.6% of household income by Dec 2023 (refer Chart 1). While that may not sound like a particularly scary figure, it's 25% above the 10-year average and 49% above the long run average dating back to 1960. It will also represent the biggest one year rise in utility bills in the post-War period. The cause for the spike has been well documented. A surge in global coal and energy prices in reflex to the invasion of the Ukraine was the dominate force, some unfortunate timing of coal-fired power station maintenance and some less than transparent behaviour by market participants all played a role. Yet the cause of the trend rise in utility costs is less well understood at the household level; the rapid transition to renewables is unravelling the economics of running coal and gas-fired generation at an even more rapid rate. This is not to say that decarbonising the grid in an expeditious manner is not necessary or desirable. It merely means that the cost of the transition will be felt well beyond well-heeled investors asked to dig deep into their pockets to finance the capital cost of the transition. Indeed, it is the consumer that will invariably be forced to pay for the potholes in the road to decarbonisation as firms seek to recover the cashflow hit from declining economics of traditional generation via higher power bills. Utility companies know this. Politicians should know this. Households largely have no idea that they are ultimately on the hook if best intentions of a smooth energy transition turn to custard somewhere along the journey. To overwork the analogy, we have barely gotten the car out of the driveway with a long journey ahead to a known destination but without a clear map of how to get there. We don't have enough cash in our wallet to complete the journey, some of the roads have not yet been built, and the kids who have been fighting politically for years before getting in the car are continuing to do battle in the backseat. For those of us scarred from family car trip holidays at this time of year, we are collectively at the point where optimism and excitement at the start of a trip are about to be overwhelmed by the reality of a long-haul car trip in the Australian heat. The feeling of sizzling hot car seats, the taste of Aerogard inadvertently sprayed into a protesting mouth and the injustice as youthful back seat rebellion is brutally supressed by the front seat elites. Yes, it's going to be a long and painful journey. But to get a sense of who will bear more of the cost, we can look at the average quarterly electricity bill across different dimensions. By household size (refer Table 2), the more children you have the greater the power bill increase (and the more time the parent spends wandering around the house turning off lights left on by their children). By age, it's the young that will feel the pain more acutely (refer Table 3). Indeed, Gen Z (18-24yo) power bills will swamp the bills of Baby boomers (60+) by $150 p.a. Yes, despite the moral superiority of youth, it seems it takes more power to fuel video gaming sessions in the wee hours and to charge the armoury of devices required to keep your social media presence tip top! From the perspective of a top-down economist, the addition increment to inflation from rising power and gas bills could add 1.75% to inflation by the end of 2023 in first round impacts and potentially a further 0.35% in second round effects (Refer Table 4). That's a lot, but that's an average estimate. From the perspective of young households with multiple children living in the Eastern States, the impact will be larger and more painful. Worst still, this is the slice of the population that are most at risk of rising education, health, insurance and housing costs. We all know that the interest payments on the stock of existing total household debt are set to rise incredibly sharply in 2023, compounded by the roll off of fixed rate mortgages (refer Chart 2). In conjunction with principal payments, debt servicing for the average household is set to breach the prior record during 2023 (refer Chart 3). Again, this is for the average household. The situation for young mortgaged households is far more dire, not to mention a rising proportion of the recent new homeowners who are now entering negative equity scenarios for their homes. This will place an enormous impost on a large section of society. Nobody likes having their discretionary income squeezed and nobody likes an unexpected spike in their gearing ratio via falling asset prices. Even if we assume the ongoing robust growth in wages and employment in 2023 the impost of higher interest costs, utility costs, insurance costs and rents will be sufficient to see average discretionary cashflow fall by 15% by mid-2023 (refer Chart 4), and much more for young households with large families and large mortgages. Given, retail sales growth normally closely tracks our measure of discretionary cashflow, we expect that retail sales will slow from the rapid rate of close to 20%(y/y) to zero growth by mid-2023. Note, this is likely the best-case scenario. It could easily be worse if sub-trend economic growth reveals labour market weakness with a lag, as observable in all prior downturns. The argument that Australians have accumulated 'buffers' via $260bn in 'excess savings' since the pandemic and via pre-payments on mortgages will exceed additional interest payments - for most borrowers at least - is illusionary. While this might be true in an accounting sense, the RBA is likely asking itself the wrong question. It is not a question of how big a 'buffer' is before tightening policy will hurt, it is why did households accumulate such a buffer in the first place? And is the economic outlook improving or deteriorating? Excess fiscal stimulus obviously contributed to the initial saving spike, but what if the ongoing accumulation of savings was more about de-risking asset exposure in an uncertain time or because a large cohort of the population is simultaneously entering retirement (COVID may have expedited this decision for many Baby Boomers). If this is the case, then the 'excess saving' is not suggestive that a consumption boom lies ahead that threatens future inflation. Quite the opposite: in times of rising economic uncertainty households tend to initially lift their saving rate. They do not decrease it. There has been ongoing debate whether the government has a role to play in capping utility costs. And, if so, whether that should be at the company level or the consumer level. Given the recent history of firms profiteering through the crisis by lifting prices rather than absorbing margin pressure and the impending cashflow hit for households, the answer should be obvious. More importantly, if the government wants to keep everyone in the car playing nicely during the initial phase of the energy transition, then the answer is very much yes: utility costs need to be controlled. Let's just hope that there are enough fiscal resources and goodwill to get us to that new energy destination as quickly and efficiently as possible. Author: Tim Toohey, Head of Macro and Strategy |
Funds operated by this manager: Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund |
20 Dec 2022 - The Rate Debate - 2023 predictions on the economy, inflation, and the fixed-rate mortgage cliff
The Rate Debate - Episode 34 2023 predictions on the economy, inflation, and the fixed-rate mortgage cliff Yarra Capital Management December 2022 The RBA delivered an eighth-straight rate hike to hit a 10-year high to round out a tumultuous 2022. Speakers: Darren Langer and Chris Rands, seasoned fixed-income specialists |
Funds operated by this manager: Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund |
19 Dec 2022 - Managers Insights | Glenmore Asset Management
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Damen Purcell, COO of FundMonitors.com, speaks with Robert Gregory, Founder and Portfolio Manager at Glenmore Asset Management. The Glenmore Australian Equities Fund has a track record of 5 years and 6 months and has outperformed the ASX 200 Total Return benchmark since inception in June 2017, providing investors with an annualised return of 21.78% compared with the benchmark's return of 8.69% over the same period.
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16 Dec 2022 - Insights from abroad
Insights from abroad WaveStone Capital October 2022 WaveStone Capital's Henry Hill and Kirsty Mackay-Fisher travelled to the Northern Hemisphere, visiting a large number of companies and gaining insights on the impacts of inflation and a slowing consumer. Hear their insights and observations of the outlook for the Australian share market. |
Funds operated by this manager: WaveStone Australian Share Fund, WaveStone Capital Absolute Return Fund, WaveStone Dynamic Australian Equity Fund |
05 Dec 2022 - Manager Insights | Collins St Asset Management
Chris Gosselin, CEO of FundMonitors.com, speaks with Rob Hay, Head of Distribution & Investor Relations at Collins St Asset Management. The Collins St Value Fund has a track record of 6 years and 9 months and has outperformed the ASX 200 Total Return Index since inception in February 2016, providing investors with an annualised return of 14.17% compared with the index's return of 9.16% over the same period. Rob also discussed Collins St Asset Management's new Fund, the Collins St Convertible Notes Fund.
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21 Nov 2022 - The Rate Debate: Storm clouds continue to gather in global markets
The Rate Debate - Episode 33 Storm clouds continue to gather in global markets Yarra Capital Management November 2022 The RBA hiked rates for the seventh consecutive month as it seeks to stifle inflation. Global central banks continue aggressive monetary tightening despite early signs of moderating inflation and weaker forward growth indicators. With the consumer bearing the brunt of high inflation and tighter financial conditions, the RBA has backed away from aggressive rate hikes for now. Will other central banks follow, or is this a temporary reprieve? Speakers: |
Funds operated by this manager: Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund |
15 Nov 2022 - Magellan Global Strategy Update
Magellan Global Strategy Update Magellan Asset Management October 2022 |
Nikki Thomas, CFA, Portfolio Manager, discusses the market's reaction to the volatile macro environment, how Magellan's Global Portfolios are positioned and which quality companies are well placed to deliver growth in the years ahead. Speaker: Nikki Thomas, CFA, Portfolio Manager |
Funds operated by this manager: Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure Fund Important Information: This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 ('Magellan') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should read and consider any relevant offer documentation applicable to any investment product or service and consider obtaining professional investment advice tailored to your specific circumstances before making any investment decision. A copy of the relevant PDS relating to a Magellan financial product or service may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.com.au. Past performance is not necessarily indicative of future results and no person guarantees the future performance of any strategy, the amount or timing of any return from it, that asset allocations will be met, that it will be able to be implemented and its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of a Magellan financial product or service may differ materially from those reflected or contemplated in such forward-looking statements. This material may include data, research and other information from third party sources. Magellan makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Any trademarks, logos, and service marks contained herein may be the registered and unregistered trademarks of their respective owners. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan. |
07 Nov 2022 - Collins St Convertible Notes Webinar Recording - New Investment Opportunity & Fund Update
Collins St Convertible Notes Webinar Recording - New Investment Opportunity & Fund Update Collins St Asset Management Oct 2022 |
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The Co-Founders of Collins St Asset Management, Michael Goldberg and Vasilios Piperoglou, alongside Head of Distribution & Investor Relations, Rob Hay, hosted an interactive webinar where they announced - Announce the details of the October and November capital raisings and the way in which both existing and prospective clients can invest into the Fund. - Provide an update on the performance and positioning of the Fund, including some topical issues around increasing interest rates and the negotiation of conversion prices given recent market volatility. Speakers: Michael Goldberg, Co-Founder, Vasilios Piperoglou, Co-Founder, and Rob Hay, Distribution & Investor Relations
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03 Nov 2022 - Magellan Infrastructure Strategy Update
Magellan Infrastructure Strategy Update Magellan Asset Management October 2022 |
Gerald Stack and Ofer Karliner, CFA, discuss the recent reporting season, the European energy crisis and provide an outlook for companies in Magellan's Infrastructure Strategy. Speaker: Gerald Stack Deputy CIO, Head of Infrastructure and Portfolio Manager |
Funds operated by this manager: Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure Fund Important Information: This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 ('Magellan') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should read and consider any relevant offer documentation applicable to any investment product or service and consider obtaining professional investment advice tailored to your specific circumstances before making any investment decision. A copy of the relevant PDS relating to a Magellan financial product or service may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.com.au. Past performance is not necessarily indicative of future results and no person guarantees the future performance of any strategy, the amount or timing of any return from it, that asset allocations will be met, that it will be able to be implemented and its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of a Magellan financial product or service may differ materially from those reflected or contemplated in such forward-looking statements. This material may include data, research and other information from third party sources. Magellan makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Any trademarks, logos, and service marks contained herein may be the registered and unregistered trademarks of their respective owners. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan. |
02 Nov 2022 - Around the world in 200 Meetings, Chris Willcocks: Management Teams
Around the world in 200 Meetings, Chris Willcocks: Management Teams Alphinity Investment Management October 2022 From Stockholm to Zurich, then a week in the UK at a European Industrials Conference. Chris Willcocks details his time spent overseas visiting companies, seeing their assets and operations and meeting management teams. Speakers: Chris Willcocks, Portfolio Manager & Elfreda Jonker, Client Portfolio Manager This information is for advisers & wholesale investors only. |
Funds operated by this manager: Alphinity Australian Share Fund, Alphinity Concentrated Australian Share Fund, Alphinity Global Equity Fund, Alphinity Sustainable Share Fund Disclaimer |
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