Monash Absolute Investment Fund

Monthly Performance Report: September 2021

During the September quarter, the Fund rose 2.97% (after fees).  This compares to an increase of 1.71% for the S&P/ASX200 and 3.44% for the Small Ords.

It was quite a volatile quarter with the portfolio down in July and September, despite being up overall. The highlight of the quarter was the results season in August, where 5 of the top 10 positions earnings announcements were positive for the portfolio, and only one against.

As is typical for the portfolio, there were some significant changes made over the quarter with three of the Outlook2 holdings exited, and seven new holdings established. Notably the portfolio no longer holds Uniti Group Ltd (ASX: UWL) which was exited for a 175% gain over a year and a half. Towards the end of the quarter the portfolio increased short positions having identified stocks expected to have earnings disappointments. The portfolio remains relatively concentrated and has little exposure to Resources or Financials.

For the September quarter, the distribution per unit was $2.9c per unit and will be paid on 7 October 2021.

Major Contributors

The best contributor was Lovisa Holdings Ltd (ASX: LOV) which rose 18% on the day of its result[1] and increased in price by 32% over the quarter.  Lovisa is a vertically integrated jewellery retailer with a strong store roll out program.  It is a beneficiary of economies re-opening after COVID lockdowns, and we are certainly seeing that in its like-for-like sales numbers.

One of the only exposures to resources in the portfolio is Australian Strategic Materials (Holdings) Ltd (ASX: ASM) which was a consistent performer, rising 31% over the quarter. ASM is a refiner of rare earths for metals which are the basis for important components in much modern technology. Importantly for Western economies, ASM will operate outside of Chinese rare earths supply chains which is of strategic value in the current geopolitical climate.

The next best contributor was the short position in AGL Energy Ltd (ASX: AGL) the energy generator and utility retailer. We had established the short following the announcement by AGL that it would separate its business, to exclude the coal based power stations. Over the course of the quarter AGL fell 36%.  We have since covered this position.

Major Detractors

The biggest detractor was Electro Optic Systems Holdings Ltd (ASX: EOS) a business that uses lasers for tracking and communication. EOS fell 15% on the day of its result and 21% for the quarter[2]. We expect multiple positive announcements from EOS over the next 12 months regarding cash receipts, additional contract wins and progress on external funding of the SpaceLink project.

 

People Infrastructure Ltd (ASX: PPE) is a labour-hire company whose operations have been somewhat effected by COVID. While its result in August beat expectations it has been overshadowed by the impact of the Delta variant and was down 16% for the quarter. It sits on a modest valuation profile but has good underlying organic growth (ex COVID) and has also been achieving growth by acquisition. We expect a strong recovery in PPE as the Australian economy emerges from lockdowns given the reported vaccination rates.

 

 

 

For all business development enquiries, please contact

Cameron Harris (Acting on behalf of Monash Investors)

P: +61 400 248 435

Cameron@winstoncapital.com.au

Acting on behalf of Monash Investors

 

For all investors enquiries, please contact

Link Market Services Limited

E: Monash@linkmarketservices.com.au

 

[1] https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02411832-3A573806?access_token=83ff96335c2d45a094df02a206a39ff4

[2] https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02414414-2A1319534?access_token=83ff96335c2d45a094df02a206a39ff4

2411830-3A573805?access_token=83ff96335c2d45a094df02a206a39ff4

Return Summary Since Inception1(after all fees)

Since Inception (p.a.)12.66%
1 Month-3.05%
3 Months2.97%
6 Months5.38%
FYTD2.97%
1 Year30.71%
3 Years19.43%
5 Years11.87%
9 Years13.03%
Cumulative201.27%

1Inception date of Fund is 2 July 2012.

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.

Portfolio Analytics Since Inception

Sharpe Ratio0.67
Sortino Ratio1.21
Standard Deviation (p.a.)16%
Positive Months63%
Maximum Drawdown-29%
Avg Gross Exposure90%
Avg Net Exposure79%
Avg Beta0.65
Avg VAR1.2%

Monthly Portfolio Metrics

Outlook Stocks (Long)17 Positions: 76%
Outlook Stocks (Short)1 Positions: -1%
Event, Pair and Group (Long)2 Positions: 13%
Event, Pair and Group (Short)1 Positions: -5%
Cash18%
Gross Exposure95%
Net Exposure82%

Key Fund Information

FUM$17m
Minimum Investment$20,000
Management Fee1.2813% p.a.
Performance Fee20.5% above the RBA Cash Rate + 5% with High Water Mark
Pricing FrequencyDaily
Distributions Quarterly , targeting 1.50% p.a. of NAV each quarter
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

    NSW, VIC & SA: James Archer
    Winston Capital partners (Acting on behalf of Monash Investors)

    P. +61 432 273 335
    E. james@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

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

    P. +61 400 248 435
    E. cameron@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

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          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 1 July 2021 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.

          The rating contained in this document 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.

          The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned MON0001AU June 2021) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

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