How one fund successfully beat Mad March
While every Australian equity fund saw heavy losses for March – and was the case outside the sector – one Australian equities fund navigated the month successfully, even outperforming a bear hedge fund.
According to FE Analytics, APSEC’s Atlantic Pacific Australian Equity fund returned 17.19% in March, while the BetaShares Australian Equities Bear Hedge fund returned 16.85%, and the average sector return was a loss, within the Australian Core Strategies universe, of 19.46%.
Since the start of the year to 31 May, 2020, APSEC has returned 25.85%, followed by BetaShares’ Bear Hedge (5.18%), Perennial Private to Public Opportunities (4.4%), Lincoln Australian Growth Wholesale (2.16%) and Hyperion Australian Growth Companies (-0.03%), while the sector average was a loss of 11.59%.
Launched just over seven years ago, on 31 May, 2013, the fund is a long-bias equity market product which typically buys or short sells Australian listed securities and derivatives.
Nicolas Bryon, fund manager at APSEC Funds Management, said managing downside risk was what they did well.
“We don’t necessarily believe you can do that consistently with stocks per se… [but] when we go through events like this, we put on more shorts related to the thematic or lower the beta of the actual longs as well,” Bryon said.
The firm had started taking all their market risk off in February, over several weekends before the March sell-off.
“In terms of what we did specifically during March, it started in late February, it had been something we had been thinking about for quite some time where we’d take all our market risk off over weekends,” Bryon said.
As valuations continued to rise to “ridiculous” levels, it was expected there was due to be an event that would lead to a sell-off.
“It’s always when valuations are really high that you get super whacked and that’s what happened during March for many people,” Bryon said.
“We’re high volatility traders, when volatility is high and we’re not performing then there’s something wrong with us.”
Best performing Australian equity funds since the start of the year to 31 May 2020
AUTHOR
Chris Dastoor
Recommended for you
Investment solution provider Channel Capital has appointed James Archer as its latest distribution director, joining from Pinnacle Investment Management.
Bennelong Funds Management has signed a memorandum of understanding with US private credit manager Monroe Capital to distribute its products in Australia.
Global equity manager Talaria Capital has appointed a Sydney-based sales director as it grows its distribution presence across Australia.
Global private markets firm Partners Group has launched an evergreen fund to provide Australian advisers with access to its cross-sector royalties strategy.
