Monash Absolute Investment Fund

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 2019

Monthly Update

For the month of December, the portfolio was down -0.11% (after fees) compared to the S&P/ASX200 down -0.17% and the Small Ords which was down -0.29%.

Financial year 2020 has been going well. For the six months since 30 June, the portfolio is up 9.71% (after fees) compared to the S&P/ASX 200 up 3.06% and the Small Ords, which was up 3.89%.

Calendar year 2019 was an outstanding year for returns. The portfolio was up 36.98% (after fees) compared to the S&P/ASX 200 up 23.40% and the Small Ords which was up 21.36%.

Monthly Portfolio Metrics

Outlook Stocks (Long)20 Position: 83%
Outlook Stocks (Short)1 Positions: -3%
Event, Pair and Group (Long)3 Positions: 12%
Event, Pair and Group (Short)0 Positions: 0%
Cash7%
Gross Exposure98%
Net Exposure93%
Beta0.58

Return Summary Since Inception1(after all fees)

Since Inception (p.a.)10.35%
1 Month-0.11%
3 Months-1.13%
6 Months9.71%
FYTD9.71%
1 Year36.99%
3 Years8.24%
5 Years7.57%
Cumulative109.22%

1Inception date of Fund is 2 July 2012.

Portfolio Analytics Since Inception

Sharpe Ratio0.81
Sortino Ratio1.50
Standard Deviation (p.a.)10.15%
Positive Months62%
Maximum Drawdown-15.21%
Avg Gross Exposure89.80%
Avg Net Exposure78.20%
Avg Beta0.58
Avg VAR1.18%

Highlights of calendar year 2019 – Six of the portfolio stocks that doubled[1]

Lovisa (ASX: LOV) +105%The global roll out of Lovisa “fast fashion” jewellery stores continues. This will continue to enable double digit earnings growth for many years to come, which will justify a much higher price for LOV in the future. However, we are mindful that there are limits to what price-to-earnings (P/E) the market will pay for a retailer’s near term earnings, so we cut the portfolio weight in October at $13.80. We bought some of that stock back a month later at $11.25.

Telix (ASX: TLX) +116%Telix uses nuclear medicine to image and treat prostate, kidney and brain cancers. It has 8 clinical trials in progress but also has revenue, having delivered 12,000 patient doses in 2019.  The good news kept coming for Telix in 2019, and the share price rose.  Biotech stock prices are notoriously volatile, so we have trimmed over the year, into strength.

Kogan (ASX: KGN) +127%Kogan’s low cost business model and clever use of technology have driven its sales and profit growth.  But it hasn’t been all plain sailing for the business or the stock, with changes to GST collection around imports and a sell down by management.

The stock began the year at $3.40 and we sold down holdings in May around $5.70 as it approached our price target. In August, following its full year result we increased our price target and rebuilt holdings at around $5.85, as Kogan Market Place began to demonstrate traction and the potential scale of its success became evident. The stock closed the year at $7.59

Afterpay (ASX: APT) +136% Such is the impact of Afterpay’s achievement in creating a new form of credit, it is closely scrutinised by regulators and rarely seems to be out of the news.  So more often than not, there is something for shareholders to worry about. We sold down the stock around risk events, such as the Senate inquiry and the disclosure of an Reserve Bank of Australia (RBA) review of payment surcharges. We also increased holdings in price weakness, and with the evidence of surging sales in the USA.

Electro Optic Systems (ASX: EOS) +203%EOS’s near term profit growth is driven by sales of its Remote Weapon Systems. During the year EOS upgraded its guidance a couple of times.  It also announced contract wins that will lead to longer term growth.

With analysts raising their FY2020 NPAT[i] forecasts by 80% over the year, the stock price trended up strongly. We had increased our position up early in the year, and had to trim it due to the rising price, as the year went on.

EML Payments (ASX: EML) +208%

It was an eventful year for EML with acquisitions, capital raises and significant new contract announcements. Due to conservative guidance EML also surprised positively when announcing results in 2019.  Analyst increased their FY21 and FY22 earnings per share estimates (eps) steadily over the year and this was reflected in a strong share price. As a result we were consistent sellers of EML over the year to moderate its weight in the portfolio.

[1] Includes dividends

[i] Net profit After Tax

Key Fund Information

FUM$21m
Minimum Investment$20,000
Management Fee1.5375% 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

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

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

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

P. +61 418 387 427
E. stephen@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.

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.

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