Ironbark Karara Market Neutral Fund Performance Review | News

What is the Ironbark Karara Market Neutral Fund fund?

The investment objective of the Fund is to outperform the RBA Cash Rate (after fees) over rolling 5 year periods. The Fund is an absolute return fund that aims to generate positive returns in all market environments by reducing the majority of market risk, focussing on capital preservation and exploiting individual stock mis-pricings. The Fund will utilise fundamental research to achieve this

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Latest News & Updates For Ironbark Karara Market Neutral Fund

Ironbark Karara Market Neutral Fund Fund Commentary March 31, 2022

The Karara Market Neutral Fund returned -4.65% (net) for the quarter, an underperformance of -4.66% when compared with the Reserve Bank of Australia cash rate return of 0.01% for the quarter.

Contributors
Pair: Vicinity (VCX) and Scentre Group (SCG)
Relative valuation gap closed over the month. Vicinity and Scentre Group have both started rebounding from COVID-19 low levels. Vicinity have bounced a little harder as their discount to net tangible was larger than Scentre Group’s and contributed to the price movement.

Fundamental Longs: Aussie Broadband (ABB)
Shares in Aussie Broadband gained 17%. The first half of 2022 result was pre-released, however highlights in the result commentary included continued market share gains over incumbents with an estimated market share of 5.7% at year-end, up from 5.2% in the September quarter. The company’s projections indicate its cost per customer acquisition should decline in the second half. The planned rollout of 1,200km of fibre to 63 NBN Points of Interconnect is also on-track to be completed by June.

Uniti (UWL) – On March 15 Uniti announced to the ASX they have received a bid. “Uniti confirms it has entered into exclusive discussions with HRL Morrison & Co. on behalf of its managed funds and clients (Morrison & Co). However, these discussions are non-binding, preliminary, highly conditional and uncertain as to an outcome (Indicative Proposal). The latest date that the exclusivity period will end is 22 April 2022. Uniti will update the market if this date changes. Further, Uniti confirms that the non-binding, conditional Indicative Proposal is for an indicative price of $4.50 cash per share, fully diluted, which is within the value range mentioned in the media speculation.”

Detractors
Pairs: Santos Limited (STO) and Woodside Petroleum (WPL) This pair has continued moving against the investment manager. The one year standard deviation of the pair is extreme. The level of consensus target upside for Santos Limited is +13.4% while it is -5.3% for Woodside Petroleum. The relative target price differential is also extreme at 18.8%. The investment manager is sticking with the pair as the relative attractiveness remains high.

Pairs: Westpac (WBC) and NAB (NAB) This pair was only a minor detractor for the quarter. The investment manager thinks the market is still underestimating the ability of management to deliver cost savings and manage the net interest margin appropriately. Further information should be revealed at the Westpac half year result in early May.

Fundamental Longs: Lark Distilleries (LRK) – Lark Distilleries CEO, Geoff Bainbridge, resigned unexpectedly for personal reasons in February. Based on this development the investment manager decided to exit the position. The stock fell 26% in the days after the announcement.

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Performance Review
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Product Details

Performance Review

Fund Name	Last Month ? Returns after fees in the most recent (last) month).	3 Months Return ? Returns after fees in the most recent 3 months.	1 Year Return ? Trailing 12 month returns.	3 Years Average Return ? Average Annual returns from the last 3 years.	Since Inc. Average Return ? Average (annualised) returns since inception	1 Year Std. Dev. (Annual) ? The standard deviation (or annual volatility) of the last 12 months.	3 Years Std. Dev. (Annual) ? The average standard deviation (or annual volatility) from the last 3 years.	Since Inc. Std. Dev. (Annual) ? The average standard deviation (or annual volatility) since the fund inception.	1 Year Max Drawdown ? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	3 Year Max Drawdown ? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	Since Inc. Max Drawdown ? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Ironbark Karara Market Neutral Fund	-2.31%	-2.47%	-4.12%	3.87%	3.88%	4.95%	5.51%	4.42%	-8.45%	-8.45%	-8.45%

Product Overview

Fund Name	APIR Code ? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.	Structure ?	Asset Class ? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.	Asset Category ? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.	Peer Benchmark Name ? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.	Broad Market Index ? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.	FUM ? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.	Management Fee ? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.	Performance Fee ? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.	Spread ? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Ironbark Karara Market Neutral Fund	PER7802AU	Managed Funds	Alternatives	Market Neutral	Alternatives - Market Neutral Index	Credit Suisse AllHedge Long/Short Equity Index	20.03 M	2.29%	0.00%	0.5%

Peer Comparison

Fund Name	Peer Index Name ? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.	12 Months Excess Return ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	Excess Return Annualised Since Inception ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	12 Months Alpha ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	Alpha Annualised Since Inception ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	12 Months Beta ? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	Beta Annualised Since Inception ? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	12 Months Tracking Error ? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	Tracking Error Since Inception ? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	12 Months Correlation ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.	Correlation Since Inception ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Ironbark Karara Market Neutral Fund	Alternatives - Market Neutral Index	1.67%	-63.31%	0.95	-0.42	-0.42	0.59	7.13	10.38	0.6	0.18

Product Details

Fund Name	Verifed by SMSF Mates	Manager Address	Phone	Website	Email
Ironbark Karara Market Neutral Fund	Yes		-	https://ironbarkam.com/	-

Product Due Diligence

What is Ironbark Karara Market Neutral Fund

Ironbark Karara Market Neutral Fund is an Managed Funds investment product that is benchmarked against Credit Suisse AllHedge Long/Short Equity Index and sits inside the Alternatives - Market Neutral Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Ironbark Karara Market Neutral Fund has Assets Under Management of 20.03 M with a management fee of 2.29%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.

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Historical Performance Commentary

Performance Commentary - June 30, 2021

Australia’s economy expanded faster-than-expected in the quarter as unprecedented fiscal and monetary policy stimulus continued to fuel a strong rebound from the pandemic. GDP grew 1.8% in seasonally adjusted terms quarter-on-quarter, exceeding the 1.5% rise expected by economists. The Australian economy is now 0.4% larger than in December 2019 before the pandemic and associated lockdowns caused the largest economic contraction in 90 years.

Unemployment unexpectedly plunged to pre-COVID 19 levels 5.1% in May after the number of employed Australians surged by 110,000, triple the expected figure. Unemployment is now running six months ahead of the Reserve Bank’s forecast that it would end 2021 at 5%, raising the spectre of the Reserve Bank lifting rates earlier than forecasted should the rapidly tightening jobs market led to a stronger than anticipated pick-up in worker pay.

The Ironbark Karara Market Neutral Fund returned 0.97% (net) for the quarter, an overperformance of 0.96% when compared with the Reserve Bank of Australia cash rate return of 0.01% for the quarter.

Performance Commentary - March 31, 2021

Performance Commentary - December 31, 2020

The Ironbark Karara Market Neutral Fund returned -1.74% (net) for the quarter, an underperformance of 1.76% when compared with the RBA cash rate return of 0.02% for the quarter.

Contributors

Centuria Capital Group
Acquisition of $178 million (in New Zealand dollar terms) Visy Facility located in Auckland (4.5% cap rate, 20 year WALE, 3% fixed reviews) for a new single asset unlisted fund on the Augusta platform. A $120 million Centuria Captial Group equity raising undertaken at $2.25 per share. Consensus 2021 financial year guidance upgraded for earnings per share (up 9% to 11.5-12.5 cents) and dividends per share (up 6% to 9.0 cents per share). The stock rallied over 10% from the equity raise. Pairs Trade: Home Consortium and Aventus Home Consortium successfully listed the HomeCo Daily Needs REIT and plans to further build out its funds management platform by launching a health, wellness and government focused fund in early 2021 as it works towards its target of $5 billion in assets under management.

The strategy sees it pivot from being a Large Format Retail landlord focused on repositioning the former Master’s assets to a fund manager. The investment manager forecasts Home Consortium may be able to deliver strong earnings growth of approximately 15% for the next few years underpinned by 28% assets under management compound annual growth rate within its funds, with minimal capital investment from Home Consortium until the 2024 financial year. The launch of HomeCo Daily Needs REIT provided the catalyst for Home Consortium to outperform Aventus through the quarter.

Pairs Trade: Mirvac and Stockland
Mirvac released a trading update in October, the highlight being sales rose 40% up from the prior quarter. Contracts exchanged over the first quarter of 2021 of 660 were up 40%. Mirvac has an additional 500 lots that were on deposit or conditionally exchanged at the end of the quarter (mainly WA, QLD, VIC master planned communities). Despite this strong level of activity, pre-sales declined from $971 million at June 2020 to $921 million, driven by 483 settlements (defaults at 1.9%), including higher price point apartments at Pavilions (Sydney Olympic Park). Other items of note include firstly, Mirvac will launch three new projects in the first half of 2021, including apartments at Green Square and secondly, Mirvac’s first build to rent development (LIV Indigo) is 27% let, which was said to be ahead of feasibility.

Stockland reported first quarter 2021 net deposits of 1,799, up 31% quarter on quarter. Sales momentum had slowed in August and September (average sales of 524 per month) after a strong June and July (average sales of 808 per month). The relatively weaker update saw Mirvac outperform Stockland.

Vicinity and Scentre Group
Vicinity’s quarterly update saw improvements across several key metrics: 1. Foot traffic for the week ending 3 November 2020 was 80% of the prior year (96% if excluding Victoria) and for the September quarter was 80% (94% if excluding Victoria), 2. Quarterly sales were down 32% (in line with the June quarter) but excluding Victoria were up 1.1% (versus down 14.7% in June quarter) 3. Cash collections for the September quarter improved to 56% (76% if excluding Victoria) of gross rental billings versus 49% in the June quarter.

Scentre Group have indicated at their quarterly meeting that 92% of stores are open and trading with more stores to open in the coming weeks. Third quarter rent collection of 85% includes rent collected prior periods so the better metric to focus on is year to date collections of 77%. 3,187 COVID 19 arrangements (including small medium enterprises and other) have been agreed with tenants, reflecting 89% of retailers. The key notable metric was occupancy of 98.4%, which deteriorated a further 0.40% from June 20 and the investment manager expects to continue to fall falling, leading to reduced leasing tension, lower rents and highlighting income uncertainty.

Both Scentre Group and Vicinity are facing the dual headwinds of COVID 19 and further online retail penetration. This is the reason the investment manager has a paired the positions. The investment manager thinks Vicinity is more undervalued than Scentre Group and the catalyst for Vicinity to outperform may be further COVID 19 outbreaks in NSW. Scentre Group has approximately 30% more exposure to Sydney and provides the opportunity and risk for the Fund.

Westpac and NAB
Westpac trailed NAB on the general bank recovery over the quarter. The curious aspect was that it was also trading cheaper on a per-share basis versus NAB. Westpac outperformed NAB late in the quarter as the gap began to close from where the investment manager put the trade on.

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Ironbark Karara Market Neutral Fund (PER7802AU) Report & Performance