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: October 2019

Monthly Update

For the month of October, the portfolio was down 1.12% (after fees) compared to the S&P/ASX200 down -0.35% and the Small Ords which was down -0.50%.

Financial year 2020 has been going well. For the four months since 30 June, the portfolio is up 9.73% (after fees) compared to the S&P/ASX 200 up 2.00% and the Small Ords, which was up 2.59%

The Good

Despite the gloom around Australian consumer spending, the portfolio benefitted from its holdings of retailers.

Kogan.com (ASX: KGN) rose 12%. In October, it disclosed that compared to last year, its September quarter sales revenue was up 16% and its gross profit was up 28%[i]. This led to upgraded broker earnings forecasts for the full year.

Lovisa (ASX: LOV) rose 5%. At its AGM it disclosed that the speed and success of its international store roll out was a bit ahead of market expectations[i]. There have been 31 net new stores opened so far in FY20 with more than 80 expected over the full year.

[i] https://www.asx.com.au/asxpdf/20191023/pdf/449ss6mm5fwc6l.pdf

[i] https://www.asx.com.au/asxpdf/20191029/pdf/449zswrt0l0lc9.pdf

Monthly Portfolio Metrics

Outlook Stocks (Long)19 Position: 73%
Outlook Stocks (Short)1 Positions: -2%
Event, Pair and Group (Long)3 Positions: 12%
Event, Pair and Group (Short)0 Positions: 0%
Cash17%
Gross Exposure88%
Net Exposure83%
Beta0.58

Return Summary Since Inception1(after all fees)

Since Inception (p.a.)10.60%
1 Month-1.12%
3 Months4.67%
6 Months12.84%
FYTD9.73%
1 Year25.49%
3 Years6.5%
5 Years7.34%
Cumulative109.25%

1Inception date of Fund is 2 July 2012.

Portfolio Analytics Since Inception

Sharpe Ratio0.82
Sortino Ratio1.53
Standard Deviation (p.a.)10.26%
Positive Months63%
Maximum Drawdown-15.21%
Avg Gross Exposure89.60%
Avg Net Exposure77.90%
Avg Beta0.57
Avg VAR1.18%

Click here for Glossary

The Bad

On balance, the portfolio had more stocks falling than rising this month, though none of the stocks in the portfolio suffered earnings downgrades.

AfterPay (ASX: APT) fell -20%. The closest we came to a specific piece of bad news in the portfolio was regarding the RBA announcing its 2020 review of payments regulation, including surcharging practises in Australia. Having done very well out of Afterpay, we once again cut the portfolio’s exposure to it.  We cut the weight by a third in October.

However, it will be AfterPay’s success in the USA and UK that will ultimately drive the value of the stock, as these markets are so much bigger than Australia. The latest Google Trends chart shows over the last 12 months searches for the term “afterpay” in the USA continue to grow faster than those of its competitors. At this stage the business appears to be replicating the success it has achieved so far Australia.

Short CIMIC (ASX: CIM) rose +5%. The portfolio was short CIMIC but the position was closed out during October.  CIM reported results for the first 9 months of FY19 re-iterating full year guidance[i]. Its operating cashflow conversion which had been deteriorating has now stabilised. We had shorted the company due to its deterioration in cashflow up to this point, having taken the opportunity to do so when the share price was higher.

As a result, the portfolio enjoyed a positive contribution from shorting the position, with a return of +15%.

[i] https://www.asx.com.au/asxpdf/20191023/pdf/449ss6mm5fwc6l.pdf

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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