Ellertson Global Equity Managers Fund Class A
Transcription
Ellertson Global Equity Managers Fund Class A
Ellerston Global Equity Managers Fund PERFORMANCE REPORT April 2015 Fund performance^ Investment Objective 1 Month 3 Months 1 Yr 3 Yr p.a 5 Yr p.a Strategy Since Inception p.a GEMS A Net 3.80% 12.79% 24.81% 15.56% 13.16% 13.22% GEMS B Net 3.80% 12.79% 24.79% 15.11% 12.65% 13.00% The investment objective is to generate superior returns for Unitholders with a focus on risk and capital preservation. Investment Strategy Global long/short equity Overlays fundamental stock selection with macroeconomic outlook Bias toward Australia Commentary Key Information Strategy Inception Date 1 January 2002 Fund Net Asset Value A$133M Liquidity Quarterly Class A Redemption Price A$1.5422 Class B Redemption Price A$1.5030 No Stocks 115 Gross Exposure 165% Net Exposure 75% Management Fee 1.5% p.a Buy/Sell Spread 0.25% Performance Fee 16.50% Firm AUM A$4,141 M Ellerston Capital Limited ABN 34 110 397 674 AFSL 283 000 The Ellerston Global Equity Managers Fund posted a solid return of 3.8% in April, despite the month proving to be a cruel and surprisingly volatile month for global investors. Key contributors to the positive performance of the Fund included the Fund’s holdings in Bellamy’s, Blackmores and Nabors Industries. Many investors had bet the US dollar would continue to firm, oil prices would come under further pressure and the rally in global bonds would gain further steam. Instead, trades that had proved to be winners in the last six months completely backfired, as a confluence of negative economic data suddenly dimmed the outlook for the US economic recovery, prompting many investors to push back their expectations for when the Federal Reserve will raise key interest rates. US equities continued to rally in April, with the S&P500 climbing 0.9% to 2,086 and the Nasdaq finishing 0.8% higher at 4,941. The eagerly awaited US Q1 earnings season kicked off, with analysts expecting the strong dollar and the cold snap to weigh on corporate profits. Household names like Ford, 3M, LinkedIn and Google all missed analyst expectations, with social-media company Twitter shares tumbling 22% in the month (in the first quarter, Twitter’s stock rallied a staggering 40%). Of the 75% of companies that have reported thus far in the US, EPS growth across the S&P500 is running at +1.9%. China was the standout performer, with the Shanghai Composite Index finishing +18.5%, boosted by further stimulus from the PBoC which cut the reserve requirement ratios for financial institutions in an attempt to fuel lending and sustain growth. Hot on the heels of China, Hong Kong equities also rallied, climbing 13% in the period. The moves were fuelled by the opening of “the connect”, which allows Chinese investors access to Hong Kong markets. Japanese equity markets also climbed over the month, with the Nikkei putting on an additional 1.6%, taking it to 19,520. Level 11 179 Elizabeth Street Sydney NSW 2000 Tel: 02 9021 7797 Fax: 02 9261 0528 [email protected] www.ellerstoncapital.com APIR Code: ECL0002AU APIR Code: ECL0007AU European markets were generally weaker (Germany -4.3%, Spain -1.2% and Italy -0.5%) as enthusiasm for the ECB’s quantitative easing program waned and uncertainty around Greek debt negotiations continued. The performance was negative, despite European corporate earnings generally delivering solid results, with 60 out of 107 European firms beating analyst expectations. The UK market escaped the continent’s fate with the FTSE ending the month 2.8% higher at 6,961, having traded through 7,000 earlier in the month. This was despite intense campaigning ahead of one of the UK’s most uncertain elections in decades. Australia underperformed most global equity markets (MSCI World Index +2.2%) during the month. The S&P/ASX200 Accumulation Index ended the month 1.7% lower, which included a savage three-day sell-off at month-end. Led by the Energy sector (+8.5%), Resources (+4.3%) outperformed ex Resource’s (-2.7%), while Banks (-5.9%) recorded their weakest performance in more than 6 months. Over the course of the month, the Australian market repeatedly tried to break the critical 6,000 point barrier, failing on each attempt. In April, we saw a sharp rally in the iron ore price after BHP announced that it would defer its inner-harbour debottlenecking project, effectively slowing its expansion plans. The Australian dollar rallied to briefly trade above the US80c mark (the A$:US$ reached a mid-month high of $0.802) before closing up 3c for the month at $0.791. Currency was a key focus for markets with the US$ reversing its recent upward trend on signs the US economy has hit a soft patch. Weaker than expected Q1 GDP growth (just 0.2% annualised) and a moderation in labour market strength have pushed out expectations for Fed tightening, with many observers now ruling out a June “lift-off” and some commentators even suggesting interest rate rises could be delayed until 2016. The US$ finished the month lower versus most major currencies including the Euro (-4%), AUD (-4%), GBP (-3%) and CAD (-5%). The move in the currency added to local concerns, with the stronger A$ weighing on businesses with offshore earnings. Notwithstanding the spate of disappointing economic data, bond yields backed up with the US 10-year rate climbing +11 basis points over the month to finish at 2.03%. Oil saw a significant rally in the period with West Texas approaching US$60/bbl and Brent north of US$66/bbl, moves partly driven by the continued reduction in US rig counts, as well as heightening geo-political tensions in the Middle East. The escalations in the region and constant naval activity in the Straits of Hormuz added to the tensions, stoking energy prices. Meanwhile on the domestic front, more positive signs from the labour market (stronger than expected jobs growth, rising participation and a surprise fall in the unemployment rate to 6.1%), coupled with a benign CPI outcome, saw the RBA cut interest rates by 0.25% to a historical low of 2% on May 5. We remain constructive on markets, but have moderately reduced our exposure, taking profits in some of our strong performing stocks. Markets remain supported by low interest rates throughout the developed world and accommodative Central Bank policy. However after rallying strongly for the past 6 months, we wouldn’t be surprised if they stalled around current levels for the next few months. Concerns about Greece are holding European markets back, while slower than expected first quarter growth, and an expectation that the Fed will raise interest rates later in the year are holding the U.S. market back. Universal Corporation (UVV) is a new position in the fund. Based in Richmond, Virginia, Universal Corporation is the largest leaf tobacco merchant globally. They are the intermediary between the farmer and the cigarette companies. Universal sources and processes tobacco leaf to their customers specifications. This is a cyclical industry, where we believe the cycle is turning upwards. Operating margins are at the low end of their historical range and we think they are heading upwards. Global tobacco inventories are at historically low levels, the Brazilian Real has weakened (leaf processors buy in Real and sell in U.S. dollars), and the large tobacco companies are vertically de-integrating, handing work back to the leaf processors. At the bottom of the cycle, UVV is trading on a p/e of 13.9x, a price/book value of 0.93x and a dividend yield of 4.4%, while maintaining a strong balance sheet. The company has increased its dividend for 44 straight years. . Ellerston Global Equity Managers Fund – Monthly Newsletter 2 Market Exposure as a % of NAV GEMS Strategy Performance & Volatility ^ 14% 180% 160% 12% GEMS Strategy 10% S&P/ASX 200 Accum Index 140% Gross Net Since Inception Return % p.a. 120% 100% 80% 60% 40% 8% S&P 500 US Accum Index (USD) 6% MSCI World Accum Index 4% 20% 0% -20% Europe Australia & NZ Asia Emerging North Markets America Grand Total 2% MSCI Europe Accum Index 0% MSCI Asia Pacific Accum Index 0% 10% 20% Standard Deviation (Since Inception) % p.a. # The GEMS strategy since inception has achieved higher returns than all of the major indexes since inception with lower risk over the same time period. Top Holdings (Alphabetical, Long only) • • • • • Aristocrat Leisure Bellamy’s Australia Bentham IMF Blackmores Elis • • • • • Key Service Providers - Enel Spa GWA Group Nufarm Reckitt Benckiser Group Verizon Communications - Registry: Link Market Services Limited Auditor: Ernst & Young Prime Broker: Morgan Stanley Intl & Co PLC & Goldman Sachs International Administrator: Citco Fund Services (Australia) Pty Ltd Custodian: State Street Australia Limited Material Matters During the month there were no material changes to the Fund in terms of its risk profile, investment strategy or changes to investment staff which would impact this strategy. There have been no changes to the key service providers described above. Disclaimer ^ Actual performance for your account may vary from that set out in this newsletter and will vary for investments made in different classes, or at different times throughout the year. Some performance data is estimated and preliminary and subject to change. ^^For the period 1 January 2002 to 30 April 2006, the CPH Group GEMS Portfolio was not operated within a separate fund structure. The underlying investment assets of the CPH Group GEMS Portfolio were owned during that time within corporate entities of the CPH Group for which audited accounts were prepared on an annual basis. Accordingly, in order to provide relevant historical performance information for the period 1 January 2002 to 30 April 2006 (Historical Returns) net returns were calculated on the basis of the actual dollar returns of the CPH Group GEMS Portfolio adjusted to reflect a fund structure similar to the Fund and including all fees. For GEMS B, GEMS A returns have been used between 1 May 2006 and 2 November 2009. The returns of the Fund and the relevant Indices are net of fees, expenses and taxes and assuming distributions are reinvested. The performance figures presented are for the Ellerston Global Equity Managers Fund GEMS A and B Units. The one month return figure may be an estimate and not the final return. This estimate also impacts other performance information provided. Estimated performance figures are preliminary and subject to change. Returns for other classes may differ slightly. Past performance is not indicative of future performance. Ellerston Capital Limited ABN 34 110 397 674 AFSL 283 000 is the responsible entity of the Ellerston Global Equity Managers Fund ARSN 118 887 095 (Fund). This newsletter has been prepared by Ellerston Capital Limited without taking account of the objectives, financial situation or needs of investors. Before making an investment decision you should consider your own individual circumstances and obtain a copy of the Product Disclosure Statement for the Fund dated 31 January 2014 which is available by contacting Ellerston Capital. This material has been prepared based on information believed to be accurate at the time of publication. Assumptions and estimates may have been made which may prove not to be accurate. Ellerston Capital undertakes no responsibility to correct any such inaccuracy. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information. To the full extent permitted by law, none of Ellerston Capital Limited, or any member of the Ellerston Capital Limited Group of companies makes any warranty as to the accuracy or completeness of the information in this newsletter and disclaims all liability that may arise due to any information contained in this newsletter being inaccurate, unreliable or incomplete. # The standard deviation is often used by investors to measure the risk of an asset. The standard deviation is a measure of volatility: the more an asset’s returns vary from the average return, the more volatile the asset. A higher standard deviation means a greater potential for deviation of return from the average return of the asset. Ellerston Global Equity Managers Fund – Monthly Newsletter 3