ASX:MAAT Monthly Performance Report

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Monthly Performance Report: October 2022

In October, the Fund rose 7.19% (after fees).  This compares to an increase of 6.04% for the S&P/ASX200 and a rise of 6.46% for the Small Ords.

There have been large swings, up and down, in the market over the last 6 months, but it has generally trended down.  Smaller stocks have been particularly disappointing.  During this volatile period, the Fund’s flexible mandate showed its strength. It allowed us to establish a significant cash weight and proactively adjust our long and short positions when markets reached extremely overbought and oversold levels. Over this time the Fund rose 0.94% (after fees) compared to a fall of -5.41% for the S&P/ASX200 and a drop of -14.36% for the Small Ords.

In last month’s update we reported that our biggest detractor was Telix Pharmaceuticals Limited (Telix, ASX: TLX) which fell 23% on its decision to withdraw its marketing authorisation application for investigational product Illuccix in Europe.  The price drop was an exaggerated response during a time of market weakness.

This month TLX rose 47%, more than making back last month’s fall, with the release of its September quarter business update. Total revenues for the period were $55.3m, up 168% on the previous quarter. The next catalyst is likely to be the headline data from the pivotal trial of TLX-250-CDx for the imaging of renal cancer, due early November. Telix has always been a stock with lots of news flow. This is not surprising as its products are currently involved in about 20 clinical trials covering both company sponsored and investigator led programs.

While Telix was the star last month, positive contributions to performance from the Fund’s stocks was broad based. Aside from meaningful gains in our Energy exposure, notable mentions include Lovisa Holdings Limited (ASX: LOV) and QBE Insurance (ASX: QBE). Healthia Limited (ASX: HLA) and Calix (ASX: CXL) were detractors to the portfolio, but we remain positive on both companies’ outlooks.

In a generally quiet month, portfolio turnover was pretty typical for the Fund. We exited two stocks due to early warning triggers, and closed two short positions that were close enough to our price targets. We established 5 new short positions based on stock specific reasons including emerging structural challenges to their businesses, solvency concerns and abrupt management exits.

Overall the portfolio’s net exposure (adjusted for a couple of stocks held under cash take-over) remains around its long term average.

The portfolio remains positioned with a long bias to quality. Key long positions are in companies resilient to inflationary pressures and oversold cyclicals with dominant competitive positions. Our short book has risen slightly above its long term average weight as we continue to find compelling shorting opportunities. The portfolio’s cash weight of ~20% will allow us to patiently take advantage of any continued market volatility in the upcoming months.

Return Summary Since Inception1(after all fees)

Since Inception (p.a.)-0.80%
1 Month7.19%
3 Months1.11%
6 Months0.91%
FYTD8.06%
1 Year-9.88%

1Inception date of Fund is 28 May 2021.

Fund Strategy

The Monash Absolute Active Trust (Hedge Fund) ASX:MAAT seeks to implement the investment strategy by investing in Australian equities (long and short).

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.

Portfolio Analytics Since Inception

Sharpe Ratio0.55
Sortino Ratio0.97
Standard Deviation (p.a.)16%
Positive Months61%
Maximum Drawdown-29%
Avg Gross Exposure91%
Avg Net Exposure79%
Avg Beta0.67

Monthly Portfolio Metrics

Outlook Stocks (Long)13 Positions: 69%
Outlook Stocks (Short)3 Positions: -5%
Event, Pair and Group (Long)5 Positions: 24%
Event, Pair and Group (Short)3 Position: -4%
Cash16%
Gross Exposure103%
Net Exposure84%

Invest with us

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

This information is issued by Monash Investors Pty Limited ABN 67 153 180 333, AFSL 417 201 (“Monash Investors”) as authorised representatives of Sanlam Private Wealth Pty Ltd ABN 18 136 960 775, AFSL 337 927 (“Sanlam”) for the provision of general financial product advice in relation to the Monash Absolute Active Trust (Hedge Fund) ARSN 642 280 331 (“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 28 May 2021.

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, Sanlam 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 14 April 2021 together with a Target Market Determination (“TMD”), both issued by Perpetual, is available for the Fund. You should obtain and consider the PDS and TMD for the Fund before deciding whether to acquire, or continue to hold, an interest in the Fund. A copy of the PDS and TMD is available on this website.

Total returns shown for the Fund have been calculated using exit prices after taking into account all ongoing fees and assuming reinvestment of distribution. No allowance has been made for taxation 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. Reference to Target Distributions, is a target return only. There is no guarantee that the Fund will meet its investment objective. The payment of a quarterly distribution is a goal of the Fund only and neither Monash Investors or Perpetual provide any representations or warranty (whether express or implied) in relation to the payment of any quarterly cash income. The Trust reserves the discretion to amend its distribution policy 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, Sanlam 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.

The rating contained on this website is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme

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