Affluence Investment Fund Update – October 2016

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To view the full Affluence Investment Fund Update – October 2016 in pdf format, click here.

The Affluence Investment Fund decreased by 0.4% in October, well ahead of the ASX 200 Accumulation Index which lost 2.2%, however behind our inflation plus 5% target. While we never like a loss, we nevertheless take some comfort that during these negative months the Fund’s performance is usually substantially better than the general market.

It was a mixed month for our underlying managers. Of the Fund’s 25 unlisted investments, 9 provided positive returns. The Wentworth Williamson Fund was our best performer this month, increasing by 2.8% in a very difficult market. Other strong performers were the Lanyon Australian Value Fund and the Affluence LIC Fund. The largest detractors this month were our long/short funds and gold/commodities funds.

During October we didn’t invest into any new funds, however we added to some of our existing investments. These included the Phoenix Opportunities Fund, Wentworth Williamson Fund, Ellerston Australian Market Neutral Fund and the Alexander Credit Opportunities Fund.

One of the areas we continually work on in the Fund portfolio is to make sure we have access to a diversified mix of investment styles through the managers we invest with. It’s always tempting to follow the herd and push money to those funds that had the biggest gains last year, but that rarely works well.

For example, many of the Funds we compete with have a lot of long/short managers in their portfolios. This style worked very well in 2015 but these types of Funds have significantly underperformed so far this year. Our long-short managers are generally no more than 10-15% of the Fund portfolio. While we have a lot of confidence in their ability, we recognise that different styles outperform at different times and even the best managers go through lean periods.

The largest style allocation in our portfolio right now is to value managers, who have struggled a little over the past 2 years. We think the next 1-2 years may well be their time to shine.

At the end of October, the Affluence Fund held investments in 24 unlisted funds representing 59% of the total portfolio. The Affluence LIC Fund accounted for 20% of the total portfolio, and provided exposure to 21 LIC’s. We held investments in 5 other listed entities which represented 6% of the total portfolio, with the remaining 15% held in cash.

If you’d like further details of the Affluence Fund portfolio at any time, just email us and we’ll provide it to you.

If you would like to invest with us and get access to over 30 of Australia’s best fund managers, we encourage you to utilise our online application facility. Just follow the link on our website. If you’d like to add to your existing investment, you can either complete the one-page form available on our website, or use the online facility. A reminder, the cut-off for this month’s investment intake is November 25th.

If you know anyone that may be interested in the Fund, feel free to let them know.

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