Affluence Investment Fund

June 2015 Fund Update

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Fund Performance

To June 30 20153 Months6 Months1 YearInception*
Affluence Investment Fund1.4%3.1%N/A7.9%
Target Return (Inflation + 5%)1.9%3.3%N/A7.9%


The Fund commenced investing on 1 December 2014 with a limited number of initial investments. In addition the fund is currently very conservatively placed, pending the opening of the Fund to new investors and an expansion in the number of investments later in the year.

Despite its conservative positioning, the Fund investment portfolio increased in value by 1.4% during the June quarter, net of all fees and costs. This is below our long-term target, but in a quarter where the stock market fell 6.5%, probably not a bad result. Performance to date is equivalent to a 7.9% annualised return, well ahead of our target returns in what has been a difficult market. Past performance (returns and volatility) are not indicative of future performance.

The Fund holds investments in the Cromwell Direct Property Fund and the Phoenix Opportunities Fund. The investment in the Cromwell Australian Property Fund, which carries exposure to listed property, was redeemed during the quarter as we felt the yield trade had been somewhat overdone.
We currently have around 73% of the Fund’s capital invested, with the balance held in cash.

The Direct Property Fund investment performed well during the quarter as we saw increases in the value of a number of assets. The Phoenix Opportunities Fund fell 3.2% for the quarter but still significantly outperformed the share market, testament to the Phoenix team’s value focus despite investing in relatively small stocks which are usually more affected in market corrections.

Fund Investments

InvestmentClassPortfolio %
Cromwell Direct Property FundUnlisted Property50%
Phoenix Opportunities FundEquities23%

The Fund’s investments at 30 June 2015 were allocated 23% to Australian equities and 50% to unlisted property, with 27% held in cash.
The Fund aims to be fully invested, and significantly more diversified by the end of this year, holding 15-25 investments in Australia’s best managed funds and providing access to various asset classes.

We anticipate making additional investments during the September quarter, subject to market conditions. During 2015 we are aiming to expand the Fund holdings into some offshore equities, a broader range of Australian equities, selected fixed interest investments and one or two strategies designed to cushion the Fund in market corrections.

Earlier in the year we were considering well over 200 potential investment opportunities for the fund across all asset classes, gleaned from over 10,000 available in Australia. Since then, we have further reduced this list to less than 50, from which we will construct our initial portfolio.
We will continue to methodically work through these potential investments and other interesting opportunities, and will select only those which we feel are the absolute best for inclusion in the portfolio.

Because a number of the funds we invest with are themselves carrying significant amounts of cash, the underlying cash exposure is approximately 53%. This means the impact of any market correction on our portfolio should be less severe than, say, a portfolio constructed only of listed stocks. We saw this in effect in the June quarter, with the fund outperforming the Australian stock market by almost 8% during the period.

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