Bennelong Kardinia Absolute Return Fund is a long/short strategy investing in Australian equities. It aims to generate consistent positive returns in all market conditions, with an overarching philosophy of capital protection.
The Bennelong Kardinia Absolute Return Fund returned +3.26% in April, with the market up for the seventh consecutive month (S&P/ASX300 Accumulation Index +3.70%).
Key contributors and detractors for the month
Fenix Resources operates the small high grade Iron Ridge iron ore mine in Western Australia. It is a simple open pit operation with direct shipping ore transported 490km by road to the Geraldton Port. The company has offtake agreements with Sinosteel for 50% of production and Atlas Iron (a subsidiary of Hancock Prospecting) for the other 50%. The management team have done an excellent job navigating the permitting and native title processes to get the mine into operation and are now reaping the rewards of a very strong iron ore price.
Beach fell after announcing a larger than expected downgrade to the size of its western flank 2P reserves while a short position in Share Price Index Futures was the major contributor to the negative performance for the Short Book this month.
The best sectors for the month were Information Technology (+9.7%), Materials (+6.8%) and Industrials (+4.3%). Energy (-4.9%), Consumer Staples (-2.5%) and Utilities (-1.2%) lagged.
What is Bennelong Kardinia Absolute Return Bennelong Kardinia Absolute Return is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Long Short Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Bennelong Kardinia Absolute Return has Assets Under Management of 48.36 M with a management fee of 1.54%, a performance fee of 20.50% and a buy/sell spread fee of 0.4%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Bennelong Kardinia Absolute Return has returned 9.57% in the last month. The previous three years have returned 1.46% annualised and 7.57% each year since inception, which is when the Bennelong Kardinia Absolute Return first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Bennelong Kardinia Absolute Return first started, the Sharpe ratio is 0.33 with an annualised volatility of 7.57%. The maximum drawdown of the investment product in the last 12 months is -8.99% and -13.83% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Bennelong Kardinia Absolute Return has a 12-month excess return when compared to the Domestic Equity - Long Short Index of -6.6% and -7.5% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Bennelong Kardinia Absolute Return has produced Alpha over the Domestic Equity - Long Short Index of -0.5% in the last 12 months and -0.08% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Long Short Index category, you can click here for the Peer Investment Report.
What level of diversification will Bennelong Kardinia Absolute Return provide?
Bennelong Kardinia Absolute Return has a correlation coefficient of 0.63 and a beta of 0.93 when compared to the Domestic Equity - Long Short Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Bennelong Kardinia Absolute Return and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Bennelong Kardinia Absolute Return with the ASX Index 200 Index?
For a full quantitative report on Bennelong Kardinia Absolute Return compared to the ASX Index 200 Index, you can click here.
Can I sort and compare the Bennelong Kardinia Absolute Return to do my own analysis?
To sort and compare the Bennelong Kardinia Absolute Return financial metrics, please refer to the table above.
Has the Bennelong Kardinia Absolute Return been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Bennelong Kardinia Absolute Return?
If you or your self managed super fund would like to invest in the Bennelong Kardinia Absolute Return please contact Level 26, 20 Bond Street, Sydney NSW 2000 via phone +61 1800895388 or via email client.experience@bennelongfunds.com.
How do I get in contact with the Bennelong Kardinia Absolute Return?
If you would like to get in contact with the Bennelong Kardinia Absolute Return manager, please call +61 1800895388.
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Bennelong Kardinia Absolute Return. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - February 28, 2023 The Bennelong Kardinia Absolute Return Fund returned -3.91% in February, with the market also down (S&P/ASX300 Accum Index -2.55%) as signs of weakening earnings momentum came to the fore during the February profit reporting season. US and Asian markets were also weak (S&P500 -2.4%, MSCI Asia ex Japan -4.6%) although European markets posted positive returns (Euro Stoxx 50 +1.9%, FTSE 100 +1.8%).
The Reserve Bank of Australia increased the cash rate by 25bp to 3.35% while the US Fed raised the target range for the fed funds rate by 25bps to 4.5%-4.75%. Bond yields reversed last month’s falls (US 10-year +43bp to 3.95%, Australian 10-year +30bp to 3.86%).
The key theme from the February profit reporting season was negative earnings revisions, with FY23 earnings growth cut by 0.7% to +6.6%. The cuts to earnings estimates were broad-based and outlook comments generally acknowledged that we are entering a tougher economic environment. The lack of earnings beats mirrored the experience from the US 4Q reporting season.
Performance Commentary - December 31, 2022 The Bennelong Kardinia Absolute Return Fund fell 3.10% in December, with the market also down (S&P/ASX300 Accum Index -3.29%). Global markets were also weak (S&P500 down 5.8%, Euro Stoxx 50 -4.3%, FTSE 100 -1.5%, MSCI Asia ex Japan -0.8%).
The market grew concerned that a pivot in monetary policy (from tightening to neutral) may take longer than expected after US 3Q GDP (+3.2% year on year) printed stronger than expected.
During the month, the Reserve Bank of Australia raised the cash rate target for the eighth month in a row (by 25bp to 3.10%). The total increase in rates over that period has been +300bp). The US Federal Reserve increased the federal funds rate by 50bp to 4.25%-4.50%.
The best sectors for the month were Materials (-0.9%), Utilities (-1.2%) and Consumer Staples (-1.8%), while Consumer Discretionary (-7.0%), Information Technology (down 5.4%) and Industrials (-4.9%) lagged.
Performance Commentary - November 30, 2022 The Bennelong Kardinia Absolute Return Fund returned +2.50% in November, with the market also up strongly (S&P/ASX300 Accum Index +6.49%). Global markets rallied hard (MSCI Asia ex Japan +13.5%, Euro Stoxx 50 +9.7%, FTSE 100 +7.1%, S&P500 +5.6%).
The strength in the market over the past two months has been driven by favourable inflation data which suggests that a pivot in monetary policy (from tightening to neutral) is closer than previously anticipated. Australian headline CPI data for October was +6.9% year on year (below market expectations of +7.6%) while US CPI for October was +7.7% year on year (down from +8.2% in September).
During the month, the Reserve Bank of Australia raised the cash rate target for the seventh month in a row (by 25bp to 2.85%). The total increase in rates over that period has been +275bp). The US Federal Reserve increased the federal funds rate by 75bp to 3.75%-4.00% with Chairman Powell commenting that the time for moderating the pace of rate increases could come as soon as the December meeting.
It will be interesting to observe whether the recent trend of lower inflation continues such that it returns to target ranges (Australia 2-3%, US 2%) or whether inflation bottoms out at a higher level such that the market must readjust its assumption of a benign rate rise path from here.
The best sectors for the month were Utilities (+20.8%),
Materials (+16.3%) and Health Care (+6.0%), while
Communication Services (+2.1%), Financials (+2.5%) and
Energy (+2.7%) lagged.
Performance Commentary - October 31, 2022 The Bennelong Kardinia Absolute Return Fund returned +1.47% in October, with the market also up strongly (S&P/ASX300 Accum Index +5.96%). Global markets were also generally strong (Euro Stoxx 600 +9.1%, S&P500 +8.1%, FTSE 100 +3.0%, MSCI Asia ex Japan -5.7%).
The rebound from last month was driven by speculation of an impending pivot by the US Fed as economic data begins to weaken. During the month, the Reserve Bank of Australia surprised the market with a lower than expected 25bp increase in the cash rate target (to 2.60%). In dovish comments, the RBA noted that the cash rate had been increased substantially in a short period of time (50bp increases at each of the past four RBA meetings).
The best sectors for the month were Financials (+12.2%), REIT’s (+9.9%) and Energy (+9.5%), while Consumer Staples (-0.2%), Materials (-0.1%) and Health Care (+0.6%) lagged.
Performance Commentary - September 30, 2022 The Bennelong Kardinia Absolute Return Fund returned +2.30% in September, strongly outperforming the market which fell significantly (S&P/ASX300 Accum Index -6.29%). Global markets were also weak (MSCI Asia ex Japan -10.5%, S&P500 -9.2%, Euro Stoxx 600 -5.5%, FTSE 100 -5.2%).
The weakness was driven by a hawkish US Fed, which raised the US Fed Funds Rate by 75bp to 3.00-3.25% and global recession fears. The Reserve Bank of Australia increased the cash rate target by 50bp to 2.35%.
All sectors of the market were negative during September. The best sectors were Materials (-2.3%), Energy (-3.8%) and Health Care (-4.4%), while Utilities (-13.8%), REITs (-13.6%) and Information Technology (-10.6%) lagged.
Returns in September were dominated by our Short Book which added 349bp for the month. The top three short contributors were a global consumer discretionary stock, a global information technology stock and a global bank.
Resmed rose 5%, largely reversing last month’s fall. We believe the window is still very much open for Resmed to continue to take market share from Philips and lift prices with no clear signs that things are improving for Philips post a recent product recall.
Performance Commentary - August 31, 2022 The Bennelong Kardinia Absolute Return Fund returned +0.05% in August, while the market was also up (S&P/ASX300 Accumulation Index +1.18%). The Australian market outperformed global indices with the focus largely on the domestic profit reporting season, where more companies beat expectations than missed by a factor of 3:2. Margins are holding for now, with higher costs largely being passed on but labour shortages continue to be an issue.
Global markets were weak (Euro Stoxx 600 -5.1%, S&P500 down 4.1%, FTSE 100 -1.1%, MSCI Asia ex Japan +0.4%). This was driven by hawkish commentary from the US Fed at the annual Jackson Hole symposium. The Reserve Bank of Australia increased the cash rate by 50bp to 1.85%.
The best sectors for the month were Energy (+7.8%), Materials (+4.4%) and Communication Services (+2.5%), while REITs (-3.5%), Consumer Staples (-1.8%) and Utilities (down 1.6%) lagged.
Performance Commentary - July 31, 2022 The Bennelong Kardinia Absolute Return Fund returned +1.15% in July, while the market rebounded from its -8.97% fall last month (S&P/ASX300 Accumulation Index +5.95%). During the month US CPI came in above expectations, hitting a 40 year high of 9.1% (year on year).
The US Fed raised the Fed Funds Rate by 75bp to a range of 2.25-2.50% while the Reserve Bank of Australia increased the cash rate by 50bp to 1.35%. Despite this, markets rallied due to a positive US reporting season and a 2Q US GDP decline of 0.9% which lowered expectations of the pace and extent of future rate rises.
Global markets also participated in the rally (S&P500 +9.2%, Euro Stoxx 600 +7.5%, FTSE 100 +3.7%, MSCI Asia ex Japan down 0.1%).
The best sectors for the month were Information Technology (+15.2%), REITs (+11.9%) and Financials (+9.3%), while Materials (-0.7%), Energy (+2.1%) and Utilities (+3.1%) lagged.
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