GAM Absolute Return Bond Defensive (AU Domicile)

For Professional and Institutional
Investors use only
GAM Absolute Return Bond Defensive (AU Domicile)
Absolute Return - Fixed Income
AUD Offshore / Price as at 28 Nov 2014 AUD 0.99
December 2014
Fund description
Manager
Investment strategy:
Fixed Income
Investment objective:
Aims to provide positive absolute returns (capital and income (if any)) over the medium term in excess
of the 3-month BBSW plus 2 - 4% per annum net of fees and expenses.
Investment style:
The managers use a fundamental, top-down approach to actively allocate across fixed income sectors
globally including developed and emerging market government bonds, investment grade credit, high
yield credit, convertible bonds, mortgage backed securities and foreign exchange to capture
investment opportunities while diversifying risk.
Timothy Haywood and Daniel Sheard
Manager commentary as at 28 Nov 2014
Fund facts
The US economy continued to perform well in November. Unemployment was down to 5.8%, despite a small increase in the
participation rate, and third-quarter GDP was revised up from 3.3% to 3.9%. Severe weather distorted some data later in the month
and the important ‘Black Friday’ and ‘Cyber Monday’ sales events delivered mixed results, with no clear discernible trend. Eurozone
data also posted a small improvement. The ECB programme to buy asset-backed securities started slowly, while purchases of more
liquid covered bonds were more substantial.
The fund declined in November, with macro rates and currency strategies proving the detractors, while credit, convertibles and
emerging markets all made a positive contribution. In rates, our negative duration stance lost money. The primary detractor was our
UK exposure, where yield curve and cross market positions were loss-making. In currencies, the Norwegian krone suffered from the
decline in oil prices, while the Australian dollar was undermined by broader weakness in the commodity complex. Relative volatility
positions also suffered. Emerging markets interest rate exposure – one of our key themes throughout 2014 – made money once
again, while convertible bonds outperformed despite the headwind of hedging costs, justifying our recent optimism.
As 2014 draws to a close, we expect market liquidity to dissipate even earlier than normal. US economic momentum remains strong
and a key risk for 2015 is that the FOMC moves to adopt a more hawkish tone earlier than markets are currently discounting, with
potentially negative implications for credit markets and emerging markets debt. The recent weakness in commodity currencies is
creating a number of interesting opportunities, including the Mexican peso. The weakness of the Indian rupee is a little
disconcerting given the positive impact of lower oil prices and the strong performance of the local bond market.
Fund managed by Tim Haywood, Daniel Sheard
and Jack Flaherty
Fund type Australian Unit Trust
Base currency of the fund AUD
Inception date of the fund
19 Dec 2013
Fund size AUD 230.0m
Dealing day Any business day.
Subscriptions On any dealing day provided that
notice has been given by 14:00 (Melbourne time)
on dealing day.
Redemptions On any dealing day provided that
notice has been given by 14:00 (Melbourne time)
on dealing day.
Investment manager GAM International
Management Limited.
Annual fee 1.00%. This is the management
costs which are expressed as a percentage of Net
Asset Value of the fund, and includes Australian
Goods and Services Tax (GST) after an allowance
is made for Reduced Input Tax Credits (RITCs).
Please refer to the Product Disclosure Statement
for further details on fees and other costs.
Performance fee 10% of the amount that is the
lower of the Net Asset Value in excess of the
Indexed Net Asset Value or the NAV in excess of
the High Water Mark.
Leverage ratio 7.65%
The leverage ratio is an absolute value of net
exposure, which is calculated using 10-year bond
equivalents.
Data sources GAM, Bloomberg, Northern Trust
Fund performance and risk analysis
Performance from 19 Dec 2013 to 28 Nov 2014
Performance summary as at 28 Nov 2014
Fund %
Cash Index %
1 month return
-0.57
0.21
3 months' return
-0.36
0.67
12 months' return
Return since inception
Annualised return since inception
% of positive months
N/A
N/A
1.48
2.52
N/A
N/A
58.33
N/A
The fund does not include the security of capital which is characteristic
of a deposit with a bank or building society.
Performance history to 28 Nov 2014
Compound annual growth rate as at 28 Nov 2014
Information will be provided in this section once
there is a track record of more than 12 months.
Key to charts and tables:
Fund: GAM Absolute Return Bond Defensive (AU Domicile); Cash Index: AFMA 3-month Bank Bill Swap Rate (BBSW) Hurdle (ARADF)
Historical monthly returns
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
2014
%
0.28
0.85
0.29
0.30
0.72
-0.12
-0.19
-0.37
-0.26
0.47
-0.57
Dec
-
Year
1.39
2013
-
-
-
-
-
-
-
-
-
-
-
0.09
0.09
Past performance is not indicative of future performance. Performance is shown net of fees.
Fund performance and risk analysis, continued
Risk summary as at 28 Nov 2014
Information will be provided in this section once
there is a track record of more than 12 months.
Key to table:
Fund: GAM Absolute Return Bond Defensive (AU Domicile)
Contact details
Responsible Entity:
Equity Trustees Limited
Level 2, 575 Bourke Street
Melbourne Vic 3000
Tel: +61 (0) 3 8623 5000
Call Free: 1300 133 472
Fax: +61 (0) 3 8623 5200
Dealing
Distributor:
Shed Enterprises Pty Ltd
Level 3, 75 Elizabeth Street
Sydney, NSW, 2000
Tel: +61 (0) 2 9247 8533
Fax: +61 (0) 2 9247 8566
For daily updates on this fund and a
glossary of terms please see
www.gam.com. Access may be subject
to certain restrictions.
Source: GAM unless otherwise stated (Performance is shown net of fees, on a NAV to NAV basis). This material is directed only at persons in Australia and units in the fund are only
available to such persons. This material is confidential and is intended solely for the use of the person or persons to whom it is given or sent and may not be reproduced, copied or
given, in whole or in part, to any other person. It is aimed at sophisticated, professional, eligible, institutional and/or qualified investors who have the knowledge and financial
sophistication to understand and bear the risks associated with the investments described herein. Nothing contained herein constitutes investment, legal, tax or other advice nor is
it to be solely relied on in making an investment or other decision. It is not an invitation to subscribe and is by way of information only. Units in the Fund are issued by EQT as
responsible entity. A product disclosure statement ("PDS") for GAM Absolute Return Bond Defneive Fund (AU) is available from EQT. Subscriptions will only be received and shares or
units ('Shares') issued on the basis of the current PDS for the fund. The fund does not include the security of capital which is characteristic of a deposit with a bank or building
society.The views expressed herein are those of the manager at the time and are subject to changes.The price of Shares may go down as well as up and the price will depend on
fluctuations in financial markets outside GAM's control, as a result an investor may not get back the amount invested. Past performance is not indicative of future performance.
Reference to a security is not a recommendation to buy or sell that security. Holdings and allocations are subject to change. Prices quoted refer to accumulation Shares unless
otherwise stated. Historic data may be subject to restatement from time to time. To the extent permitted by law, no responsibility is accepted by Equity Trustees Limited (ABN 46 004
031 298 AFSL No. 240975)("EQT") or any associate or related companies, their directors, employees, representatives, or agents for any information herein, or for any action taken by
you. Neither the performance of the fund nor the return of the capital guaranteed by EQT, GAM or any other party. Important information about hedge funds: Hedge fund strategies
are speculative and are not suitable for all investors. GAM hedge fund products are only available to investors who are comfortable with the substantial risks associated with investing in
hedge funds. An investment in hedge fund strategies includes the risks inherent in an investment in securities, as well as specific risks associated with limited liquidity, the use of
leverage, short sales, options, futures, derivative instruments, investment in overseas securities, 'junk' bonds and illiquid investments. Hedge fund strategies may be leveraged and the
volatility of the price of their interests may be great. GAM has not independently verified the information from other sources and no assurance can be given as to whether such
information is accurate, true or complete and GAM makes no warranty, expressed or implied, regarding such information. Every effort has been made to ensure the accuracy of the
information provided, but GAM cannot be held responsible for any errors or omissions.
Past performance is not indicative of future performance. Performance is shown net of fees.