A quick progress check

As we round out the 2015 calendar year, we thought we would provide a quick recap on Montaka’s progress since its inception on July 1. We have been overwhelmed by the support we have received this year and humbled by the trust that so many of you have placed in us.

As the Fund stands today, we have more than US$80 million (A$110 million) of our clients’ capital under management. Since its inception, Montaka has returned 14.7 percent to our General Class investors in Australian dollar terms. And these returns have been delivered over a volatile period that has included a European sovereign default, a Chinese currency devaluation, an extreme commodity price downturn and a tightening monetary policy for the first time in eight years. These conditions have challenged many of our peers around the world.

As readers of this blog will be aware, Montaka seeks to deliver materially higher risk-adjusted returns, net of fees, than is available in the marketplace over the medium term. And Montaka seeks to deliver a significant level of capital preservation, across all market cycles.

As illustrated by Montaka’s monthly returns below (expressed in US dollar terms, so as to remove the impact of the fluctuating AUD/USD exchange rate), we are clearly delivering on Montaka’s target return profile.

Screen Shot 2015-12-11 at 3.09.15 pm

What also becomes clear, upon examining the monthly attribution of returns between Montaka’s long and short portfolios, is that we have added a substantial amount of value on the short side. These attributions illustrate how Montaka’s short portfolio not only provides “downside protection” by reducing the net exposure of the overall portfolio, but also offers us the opportunity to increase the absolute returns of Fund through superior stock selection.

Despite Montaka being less than six months old, we are proud of the performance we have delivered to date. As illustrated by the chart below, we have delivered a return of approximately eight percent (in US dollar terms that excludes the impact of a fluctuating AUD/USD exchange rate), against a market that was down by more than two percent over the same period (also in US dollar terms). Even the median return of global equity long/short peers is down by approximately one percent over this period. We can confidently say that, thus far, we have achieved Montaka’s objective to deliver materially higher risk-adjusted returns than is available in the marketplace; while also protecting the downside in falling markets.

Screen Shot 2015-12-11 at 3.05.57 pm

We are delighted to have delivered our early supporters a strong result thus far. Yet for us, and our investors, it’s not about what we achieve over the first five months of the Fund’s life, it’s what we achieve over the next 25 years (and beyond) that matters. Our focus remains on executing our systematic research process, day in and day out.

We are deeply grateful for all the support we have received this year and wish everyone, and their families, a safe and happy holiday period. We look forward to an exciting and prosperous 2016.

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