Tim Carleton from Auscap joins the podcast for a second time to discuss his new Global Equities Fund as well as the recent performance of the Long Short Australian Equities Fund.
Currently invested in names such as Capri, Google (Alphabet), Microsoft and Visa, the new Auscap Global Equities Fund is an absolute return focused fund that targets high-quality value stocks. Tim highlights that the fund has a bias towards both developed markets and well known large-cap stocks with firm levels of governance. The fund which also has the ability to short similar to the Australian Equities Fund targets 10-15% annualised return opportunities for each company that it invests in.
Tim also touches on both the recent performance and opportunities in the Long Short Australian Equities Fund. Following a difficult year in 2018 and a recovery for the fund in 2019, Tim is bullish on the outlook of the Australian economy, with indicators such as unemployment rates, terms of trade surplusses and high commodity prices supporting his view.
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Interesting interview though not sure these guys have international experience/track record. My biggest question with these guys is how can they charge fees relative to cash, when they are clearly leveraged to the market - Australian product approx 100% long the market. It is not a market neutral fund so need to get real on a benchmark. It seems will be the same with international, given how bullish they appear on the market. Example - * 1.5% base fee. * Plus last year international equities up circa 25%, so if these guys just match international equities performance they get their 15% out performance fee equating to 3.5% of your returns (approx 15% of say 25%, as cash virtually zero) * So with management fee and perf fee there is a ~5% drag (3.5%+1.5%) on your performance relative to an international equity index fund and these guys make out like bandits. Really surprised Koda is supporting a product given their big mantra on fee for service and acting in clients best interests. These guys were down ~-9% in FY19 for Aust long short in a year the market was up 10%, so how can they claim to be a credible absolute return manager?