One of Australia’s emerging Australian Absolute Return Equity Managers, Monash Investors (“Monash”), has teamed with specialist third party marketing and distribution firm Winston Capital Partners (“Winston”), in a timely bid to capture the growing demand for absolute return funds that give investors access to growth assets but with far less volatility.
“We believe that the time is right to distribute this type of capability in the market. Astute investors are starting to recognise that investing in long only, benchmark aware, fully invested and style bound managers not only hamstrings intelligent portfolio managers, but is not aligned with investor preferences. We believe investors want to avoid large drawdowns, whilst still compounding capital well above inflation” said Winston partner Andrew Fairweather.
Until now, the Monash Absolute Investment Fund (“Fund”) has only been available to wholesale investors, having been established a little over three years ago.
“Winston is pleased to have been selected by Monash to broaden the Fund’s reach, as it’s now available to retail investors seeking an absolute return Australian equity capability. The Fund has outstanding pedigree, being managed by Simon Shields, the ex head of UBS’s high performing Australian equity fund, and Shane Fitzgerald, one the markets most highly rated sell side analysts, previously from JPMorgan,” he said.
Mr Fairweather said advisers have begun looking for specific asset management characteristics to align with advice moving from strategic asset allocation to goals based investing. The Fund aims to return 12-15% per annum, after fees and expenses, over the investment cycle, with far less risk than investing in long only share portfolio, potentially making it an ideal candidate for the growth component of a portfolio where cash or inflation are the overall objectives.
“For example, the Fund might sit in the alternatives asset class because of its cash based objective, its unconstrained investment universe and its ability to hold cash and short overpriced stocks, however we see it as ‘a simply smarter way of investing into Australian shares,’ without the volatility normally associated with this asset class”, he said.
The Fund has performedi with distinction since its inception three years ago, returning 15.8% per annum after fees and expenses, with an average beta of 0.60% and a standard deviation of 8.25%, resulting in a Sharpe ratio of 1.54 as at 31 August 2015. To highlight the capital preservation features of the Fund and its focus on absolute returns, in
comparison, in the 3 months to August 2015 the S&P ASX 200 Accumulation Index was down 8.93%, whilst the Fund was up 4.82%, and in the month of August 2015 alone, the Index was down 7.83% with the Fund being up 0.22%.
“In time, the ability to preserve capital in times of market uncertainty, whilst still delivering a return well above inflation, is what investors will demand more of. These characteristics are simply not possible in long only, fully invested and equity benchmark aware strategies or index funds, and this is the exciting part of the Monash story”, Mr Fairweather said.
Monash Investor co-founders Simon Shields and Shane Fitzgerald say they are confident in the choice of Winston to help take the story to a broader market and deliver on the firm’s ambitious growth plans.
“The Fund will have almost automatic appeal for advisers and their clients who seek an absolute return Australian equity product with less volatility that is aligned with how they want their wealth managed.”