To generate double digit returns (after fees), over a full investment cycle, and avoid loss of capital over the medium term
Why these numbers?
Monash Investors believe that more wealth can be created, and with lower risk, by aiming to achieve high rates of ‘absolute returns’ versus investing in a stock market index that simply rises and falls with the market. We aim to achieve our objectives by investing in a small number of compelling stocks that offer considerable upside and by shorting expensive stocks that are at risk of falling. If we cannot find compelling stocks that meet our high return hurdle (long and short), we simply preserve our capital in cash, waiting patiently until they emerge. There is no guarantee that this objective will be achieved and this objective is only an indication of the intended target return the Fund is seeking to achieve.
How have we done?
Monash Investors has achieved it’s two target objectives (after fees), with volatility lower than investing in the equity market, as well as not losing capital in any financial year. Importantly, in times of market stress, the Fund has shown an ability to generate positive returns, or very small losses when compared to the overall performance of the market, which has assisted in compounding investor’s capital.
To May 2017(after fees)
|Since Fund inception |
2 July 2012
|Financial Year||3 Years|
|Net After Fees Return (p.a.)||Volatility (p.a.)||Max Drawdown||Return||Return (p.a.)|
|Monash Absolute Investment Fund||8.8%||9.3%||-15.2%||-10.6%||0.9%|
Avoiding large losses is a key component in aiming to achieve our objectives
As highlighted in the table, when an investor suffers a major loss of capital, it requires a much larger return to get back to breakeven, which can be very difficult to do. And as we know, stock markets regularly have periods where the losses can be large, causing unnecessary (and largely avoidable) stress for most investors. We attempt to avoid large losses by only investing in compelling opportunities that meet our high return hurdle (long and short), and if we cannot find them, we simply preserve our capital at cash in bank, waiting patiently until these opportunities emerge. Together, by only investing in a small number of compelling opportunities (long and short), whilst preserving capital in cash when we cannot find them, is how we aim to achieve our ‘absolute return’ objectives.
|Percentage Loss||Percent Rise to Breakeven|
Our definition of risk…
In line with our ‘absolute return’ objectives, we view risk as losing money. We are not interested in achieving ‘relative returns’ against stock market indexes, but in creating wealth by investing in compelling stocks (long and short) that meet our high return hurdle. Our approach means we are not forced to own stocks just because they form a major component of an index – of course, we can purchase these stocks, but only when they offer a considerable amount of upside (long) or downside (short). Warren Buffett defined this well when he said that, ‘Rule No.1: Never lose money, Rule No.2: Never forget rule No.1’ This is a key component of how we think about risk management too.
As shown in the graph, the Fund has shown that during times of market stress, that it falls far less than the market, which means it can get back to square far faster e.g. it does not have as much to rise to get back to zero. The advantage of this, is that over time, this should lead to higher compound rates of return, which can make a big different to an investor’s overall wealth outcomes.
So, in a nutshell
proven track record
The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235 150) (Perpetual) is the Responsible Entity of and issuer of units in the Monash Absolute Investment Fund (Fund), and Monash Investors Pty Ltd (ABN 67 153 180 333 AFSL 417201)(Monash Investors) is the investment manager of the Fund.
Monash Investors operates this website. All opinions and estimates on this website constitute judgements of Monash Investors and are subject to change without notice. The information on this website is provided for general information purposes only, and is not to be construed as solicitation of an offer to buy or sell any financial product. Accordingly reliance should not be placed on this website as the basis for making an investment, financial or other decisions. The information on this website does not take into account your investment objectives, particular needs or financial situation. Whilst every effort is taken to ensure the information on this website is accurate, its accuracy, reliability or completeness is not guaranteed. A product disclosure statement (PDS) issued by Perpetual dated 3 August 2015 is available for the Fund. You should obtain and consider the PDS 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 contained on this website are not necessarily indicative of future returns and should be used as a general guide only. Returns on investments necessarily are volatile and subject to change and likely to vary from year to year. These returns are likely to vary from year to year. Returns have been calculated using exit prices after taking into account all ongoing fees, and assuming reinvestment of distributions. No allowance has been made for taxation. Future returns may bear no relationship to the historical information displayed. Returns in the Fund can be particularly volatile in the short term and in some periods may be negative. Neither Perpetual nor Monash Investors makes any guarantee or representation in regards to the performance of the Fund, nor specific rate of return to investors or the return of capital.