Pengana Australian Equities Long Short Fund
Fund Overview
The Pengana Australian Equities Long Short Fund is a long / short Australian equities strategy, with a long bias and a bottom-up fundamental approach to stock selection. The Fund targets 20 – 30 longs selected from the largest 300 stocks on the ASX and 10-15 shorts selected from the top 200. The manager has a research-based investment process to evaluate investments capable of generating target returns over the medium term, with a strong focus on cash flow generation and growth at a reasonable price. Macro and technical overlays are used to assist in portfolio construction, exposure sizing and market timing. The average net long position since inception has been 45 to 50%. The Fund aims to provide investors with an absolute return of 12 to 15%1 per annum over the medium term with relatively low volatility (equity type returns with lower volatility).The manager also adopts procedures to manage risk and preserve the capital of investors. The Fund is managed out of Sydney.
1 This is not intended to be a forecast, but merely an indication of what the Fund aims to achieve over the medium to long term. The Fund may not be successful in meeting this objective. Returns are not guaranteed.
Performance
Accumulated Fund and Comparative Benchmark Performance Since Inception to end February 2010
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Pengana Australian Equities Long Short Fund
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RBA Cash Rate
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ASX 300
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Pengana Australian Equities Long Short Fund
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RBA Cash Rate
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ASX 300
The Fund invests in Australian equities with a focus on the top 300 listed companies by market capitalisation. It is long biased (the market exposure will be positive over time), but has the capability to go net short. It relies on bottom up fundamental analysis to select equities, and uses technical and macro factors to assist with determination of appropriate net exposure and timing of investment decisions.
The Fund will typically hold a relatively small number of equities in the portfolio at any given time. A core portfolio of around 25 long equities and ten short equities will be targeted. A simultaneous long / short (hedged) position will reduce directional market risk and portfolio risk.
The long portfolio will typically be invested in equities ranked 51 to 300 on the ASX by market capitalisation. An indicative weighting of these mid-capitalisation equities is 60 – 70% of the long portfolio. Most of the balance of the portfolio will be invested in the top 50 on the ASX by market capitalisation. The remainder will be invested in very carefully selected smaller capitalisation (micro-cap) equities, which exhibit sound business fundamentals, acceptable liquidity and significant stock price appreciation potential.
The short portfolio will mainly be invested in the top 200 equities on the ASX by market capitalisation, given the specific risks associated with the practice of short selling, including the potential recall of borrowed equities at short notice.
While the Investment Manager is aware of each company’s weighting within the Index, it does not size positions on this basis or focus on the risk relative to the index by using measures such as tracking error.
The Investment Manager intends to make modest use of derivative instruments, with the prime objectives of generating income on the long portfolio and creating synthetic short positions. The Investment Manager may also buy call options on selected stocks from time to time.
The Investment Manager may also occasionally make very modest use of leverage to enhance returns when appropriate but the Fund will typically be unleveraged.
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Steve Goldberg - Fund Manager
Steve has over 23 years experience in equities research and funds management. Before immigrating to Australia to join Westpac Investment Management in 1989, Steve spent four years as a fund manager at Liberty Life where he also was Head of Fixed Interest. In 1990, he joined County NatWest Securities (now Citigroup) for 13 years. He worked in the research department for ten years, before moving on to the sales desk in 2000, and was regularly rated amongst the top research analysts and sales executives in Australia. Steve co- founded the long biased long short Australian equities Saltbush Absolute Return Fund (SARF) in 2004. In early 2008 the fund was acquired by the Pengana Holdings Group and SARF was renamed Pengana Australian Equities Long Short Fund. Steve holds a Bachelor of Accountancy degree from the University of the Witwaterstrand, Johannesburg, and is a qualified chartered accountant.
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John Parker - Fund Manager
John has more than 26 years experience in equities research and funds management, covering a wide range of industrial sectors. After spending four years in funds management with the Board of Executors group and Syfrets Trust Company he joined Martin & Co. in Johannesburg as a research analyst in 1985. He joined the equities research department of Ord Minnett Securities (now JP Morgan Australia) in early 1988 in London, transferring to Sydney later that year. He moved to County NatWest Securities (now Citigroup) in 1991. During his ten years at the company, John was consistently a top five rated research analyst in the institutional market. John has also been a non-executive director of Gowing Bros Limited, a listed investment company, since 2002. John co- founded the long biased long short Australian equities Saltbush Absolute Return Fund (SARF) in 2004. In early 2008 the fund was acquired by the Pengana Holdings Group and SARF was renamed Pengana Australian Equities Long Short Fund. John holds a Bachelor of Arts (Economics) from the University of Cape Town.
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Alexander Harris - Assistant Analyst
Alex joined Pengana in June 2008 to assist John Parker and Steve Goldberg with the management of the Pengana Australian Equities Long Short Fund. Alex was previously employed as an analyst with the boutique fund manager Orion Asset Management, where he worked closely with Orion’s CEO/CIO on portfolio management. Prior to this, Alex completed a Bachelor of Applied Finance and a Bachelor of Commerce-Accounting at Macquarie University, Sydney.
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| Fund Style |
Australian equities with focus on stocks in the ASX 300 Index for longs and ASX 200 Index for shorts |
| Fund Objective |
To outperform the ASX 300 Accumulation Index over the medium term (2 to 3 years) with relatively low volatility |
| Fund Benchmark |
ASX 300 |
| Inception Date |
10 May 2004 |
| Management Fees1 |
1.25% per annum |
| Performance Fees1 |
20% per annum with high water mark |
| Buy / Sell Spread |
0.15% each on applications and redemptions |
| Entry / Exit Fee |
Nil |
| Distribution |
Yearly |
| Investors |
Wholesale Clients only |
| Minimum Initial Investment Amount |
$100,000 |
1 All percentages are plus GST net of reduced input tax credits. Please refer to the Information Memorandum for a more detailed explanation.
Pengana Australian Equities Long Short Fund
| Date |
Application A$ |
Redemption A$ |
Distribution A$ |
History |
| 28/02/2010 |
1.0769 |
1.0736 |
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* CUM price
** Ex distribution
Please note that the Fund is currently only available to Wholesale Clients (also sometimes known as “Sophisticated Investors”), and the minimum initial investment amount is A$100,000. Australian and New Zealand residents may wish to view the definition of a Wholesale Client here.
The Financial Services Guide is an important document that tells you about the services and products that Pengana Capital Limited is authorised to provide to you under the Australian Financial Services Licence. Please ensure you have read this document prior to downloading the Information Memorandum below.
In order to make an investment in this Fund, please fill in, sign and submit an application form which can be found in the Information Memorandum.
Please supply the investor-type relevant Wholesale Client’s accountant’s certificate with your application. Templates of this certificate are available from a member of our distribution team listed below.
In order to comply with regulations aimed at the prevention of money laundering and counter terrorism financing, which came into effect on 31 January 2008, we are now required to obtain more detailed identification information from any new investors into the Pengana funds. Please refer to the below section “New Application Requirements under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006” for further information and the forms which are now required.
Should you wish to make on additional investment in the Fund, please send a formless fax or letter to the registry contact stated on the application form, informing them of the amount you wish to invest along with your name(s), the account details your funds will be coming from and your investor number. This document must be signed by all original applicants. A standard electronic transfer into the Fund’s account is sufficient to finalise the application of additional funds. Alternatively, you can post a cheque, made payable to the Fund’s account as stated on the application form.
If you would like a copy of the Information Memorandum posted to you, please email your name and address to: operations@pengana.com
For any questions regarding the application process please contact:
Institutional Clients: Denis Carroll, +61 2 8524 9974, denis.carroll@pengana.com
Private Clients: Juliet Dunworth, +61 2 8524 9984, juliet.dunworth@pengana.com
Advisors: Justin Brooks, +61 3 8663 7906, justin.brooks@pengana.com
Requirements
In order to comply with regulations aimed at the prevention of money laundering and counter terrorism financing, which came into effect on 31 January 2008, we have prepared the “Know Your Customer Information” forms set out below. You will find separate forms for different types of investors, such as Individual/Sole Trader, Company, Trust (Including SMSF) and Other Organisation.
We must receive the relevant completed form and any additional verification information identified in the form before we can accept any applications from new investors into the Pengana funds.
If we have not received the completed relevant “Know Your Customer Information” form and any additional verification information required within two weeks of receiving the original application (or longer if the compliance officer agrees) then we will have to refuse the application and return the application monies without any interest payment.
Scope
Any new direct investors, or existing investors who wish to invest directly into any Pengana fund under a different investor name or entity, are required to provide the relevant “Know Your Customer Information” form.
Please note that we do not require a completed form from any existing investor in the Pengana funds, provided the investment is made in the same name. This includes existing investors who are topping up their investment in a Pengana fund or investing into another Pengana fund.
Due to the complex nature of the application of the new regulations to the fund manager / platform provider as well as fund manager / margin lender relationship, please refer to your platform provider or margin lender in the first instance as to whether you may be required to supply a Pengana “Know Your Customer Information” form with your application.
| Know your Customer Information - Individual/Sole Trader |
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| Know your Customer Information - Trust (including SMSF) |
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| Know your Customer Information - Company |
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| Know your Customer Information - Other Organisation |
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