Monthly Performance Report – December 2017

Monash Absolute Investment Fund
Lonsec
SQM

Fund Strategy

The Monash Absolute Investment Fund ARSN 606 855 501 (Fund) seeks to implement the investment strategy by investing in a diversified portfolio of predominantly Australian equities (long and short), with overseas assets expected to average no more than 5% over time.

The investment strategy is Benchmark Unaware and there is no predetermined asset allocation; rather, the Fund only invests when suitable opportunities are identified. As such, asset exposures may vary significantly over time and without notice.

The Fund seeks to only invest in compelling opportunities. To identify these investment ideas, Monash Investors primarily employs fundamental, bottom-up company research and the judgement of its experienced portfolio managers.

Monthly Performance Report: December 2017

Monthly Update

The portfolio increased 1.27% (after fees) for the month of December, during which the S&P/ASX200 rose 1.81% and the Small Ords rose 3.20%. It’s the 7th positive month in a row for the Fund which has returned 15.58% (after fees) so far this financial year.

December was a relatively uneventful month for the portfolio.  The best contributors to return were smaller positions with share prices that did well, while a number of the larger positions marked time.

In the last couple of months there have been several new holdings added as Long Outlook[i] stocks, and profits/exits taken in some of the other stocks

Monthly Portfolio Metrics

Outlook Stocks (Long)22 Position: 79%
Outlook Stocks (Short)3 Positions: -7%
Event, Pair and Group (Long)3 Positions: 10%
Event, Pair and Group (Short)0 Positions: 0%
Cash19%
Gross Exposure96%
Net Exposure81%
Beta0.63

Return Summary Since Inception1(after all fees)

Since Inception (p.a.)11.12%
1 Month1.27%
3 Months9.88%
6 Months15.58%
FYTD15.58%
1 Year8.26%
3 Years7.12%
5 Years10.99%
Cumulative78.58%

1Inception date of Fund is 2 July 2012.

Portfolio Analytics Since Inception

Sharpe Ratio0.96
Sortino Ratio1.90
Standard Deviation (p.a.)9.14%
Positive Months65%
Maximum Drawdown-15.21%
Avg Gross Exposure88.6%
Avg Net Exposure76.7%
Avg Beta0.582
Avg VAR1.00%

A Comment on 2017 by Simon Shields from Monash Investors

I wrote a piece in the monthly update this time last year when our portfolio returns were being impacted by a market bias against smaller cap growth stocks, which had started during the preceding October.

Despite positive news from a number of the portfolio stocks, and avoiding a raft of high profile earnings downgrades, January 2017 had been a difficult month with the portfolio falling about 4%.

The trend continued into February 2017, despite a strongly positive reporting season from our companies as businesses. Of the top 12 holdings, 7 beat expectations, 4 were in line and just 1 disappointed, and yet the portfolio fell another 2%.

By the end of May 2017, the portfolio was down almost a further 2%, which was quite extraordinary, given the continued positive updates and good business momentum of the stocks held. That was the lowest point of returns with the portfolio down about 14% for the rolling 12 months.

All through that period of negative returns, Shane Fitzgerald and I intensively reviewed the Fund’s stocks, to ensure we maintained a portfolio of companies that met our high standards for growth and value. Our activity levels were never higher, and you may recall that I reported on a trip that I did in June 2017, to check on the US exposures of our investments. In June 2017, the portfolio rose about 2%.

As it turned out, we continued to be mostly right in our assessments. The August reporting season was another strong one for us. Out of the top 12 holdings, 6 beat, 4 were in line and 2 disappointed, and while the portfolio only rose about 1.15% that month, it was the start of a run of strong months.

In those 7 months in 2017 from May to December, the portfolio bounced back by about 18%. We expect to continue to see positive announcements from our stocks through the coming reporting season of February 2018, and their stock prices should respond. We are also continuing to find new stocks with high pay-offs to invest in, while we harvest and exit from some existing holdings that have done their job.

Investing is fraught with uncertainty, which we seek to reduce as much as we can while targeting double-digit returns for the portfolio. While at times, outcomes can paradoxically be adverse to reality, that just increases the opportunity for returns. In the short to medium term, the unpredictability of news flow, or wider trends in markets can make a wise approach to investing seem foolish. 2017 has been a great lesson in the reward for working hard and smart, and sticking with our common sense approach to investing.

[i] Long Outlook stocks have strong business outlooks with large valuation upside and moderate to low downside risks.

Key Fund Information

FUM$48m
Minimum Investment$20,000
Management Fee1.53% p.a.
Performance Fee20.5% above the RBA Cash Rate with High Water Mark
Pricing FrequencyDaily
Distributions Annually
APIR CodeMON0001AU
Morningstar CategoryAlternatives Strategies

For all business development enquiries, please contact

SA,WA,NT: Andrew Fairweather
Winston Capital partners (Acting on behalf of Monash Investors)

P. +61 401 716 043
E. Andrew@winstoncapital.com.au

VIC, TAS: Stephen Robertson
Winston Capital partners (Acting on behalf of Monash Investors)

P. +61 418 387 427
E. stephen@winstoncapital.com.au

NSW,ACT,QLD: Rory MacIntyre
Winston Capital partners (Acting on behalf of Monash Investors)

P. +61 434 669 524
E. rory@winstoncapital.com.au

For all investor enquiries, please contact

Link Fund Solutions Pty Ltd (Acting on behalf of the Fund)

P. +61 2 9547 4311
E. LFS_registry@linkgroup.com

Monash Absolute Investment Fund Unitholder Services, GPO Box 5482, Sydney NSW 2001

For all other enquiries

E. contactus@monashinvestors.com

Cumulative Return Since Inception

Gross/Net Exposure Since Inception

Invest with us

We would welcome you as a co-investor in the Fund.

Invest

Important Information

This document is issued by Monash Investors Pty Limited ABN 67 153 180 333, AFSL 417 201 (“Monash Investors”) as authorised representatives of Winston Capital Partners Pty Ltd ABN 29 159 382 813, AFSL 469 556 (“Winston Capital”) for the provision of general financial product advice in relation to the Monash Absolute Investment Fund ARSN 606 855 501 (“Fund”). Monash Investors is the investment manager of the Fund. The Trust Company (RE Services) Limited ABN 45 003 278 831, AFSL 235 150 (“Perpetual”) is responsible entity of, and issuer of units in, the Fund. The inception date of the Fund is 2nd July 2012.
The information provided in this document is general information only and does not constitute investment or other advice. The content of this document does not constitute an offer or solicitation to subscribe for units in the Fund or an offer to buy or sell any financial product. Accordingly, reliance should not be placed on this document as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation. Monash Investors, Winston Capital and Perpetual do not accept liability for any inaccurate, incomplete or omitted information of any kind or any losses caused by using this information. Any investment decision in connection with the Fund should only be made based on the information contained in the disclosure document for the Fund. A product disclosure statement (“PDS”) issued by Perpetual dated 12 September 2017 is available for the Fund. You should obtain and consider the PDS for the Fund before deciding whether to acquire, or continue to hold, an interest in the Fund. Initial Applications for units in the Fund can only be made pursuant to the application form attached to the PDS.
Performance figures assume reinvestment of income. Past performance is not a reliable indicator of future performance. Comparisons are provided for information purposes only and are not a direct comparison against benchmarks or indices that have the same characteristics as the Fund.
Monash Investors, Winston Capital and Perpetual do not guarantee repayment of capital or any particular rate of return from the Fund and do not give any representation or warranty as to the reliability, completeness or accuracy of the information contained in this document. All opinions and estimates included in this document constitute judgments of Monash Investors as at the date of this document are subject to change without notice. Perpetual is not responsible for this document.

Share This

Sign up for Monash Insights

To keep up to date with what is happening at Monash, to get stock stories about our portfolio, as well as investment videos, please subscribe here

You have successfully subscribed to Monash Insights - please check your email to confirm

Terms and Conditions
The following information is only available to Wholesale Clients. By clicking the Agree button below you are confirming that you are a Wholesale Investor as defined by the Australian Corporations Act.
TERMS & CONDITIONS
What is a financial services licensee? A person or entity is a financial services licensee if they hold an Australia financial services licence issued pursuant to the Corporations Act 2001
BY CLICKING ON 'I AGREE', I DECLARE I AM A FINANCIAL SERVICES LICENSEE AS DEFINED IN THE CORPORATION ACT 2001.
  We hate spam and never share your details.
The following information is only available to Sophisticated or Wholesale Investors. By submitting your details you are confirming that you are a Wholesale Investor as defined by the Australian Corporations Act.

Once you have submitted the form you will be able to download the PDS
Terms and Conditions