AGS Select Long Short Fund is a long/short Australian equities fund, with a long bias. The investment manager of this fund is Sydney-based Tricom Investment Management Limited (TIML). The investment manager draws on the experience of Albert Landman, in managing the AGS fund's assets. Albert Landman has over 11 years' experience in financial markets, previously working as derivatives dealer for Macquarie Bank, Equities Advisor and Chief Equities Strategist for Tricom Equities Limited.
Launched in June 2002, The AGS Select Long Short Fund has returned 69% since inception with an annualised return of 18% and annualised volatility of 7%. The fund currently has US$3 million in assets.
- Could you tell us briefly about your investment strategy?
The fund has a long bias but reserves the right to return holdings to cash or short stocks during times of market weakness, or when individual stock weakness is seen. The concept is to smooth market returns. We offer exposure to a generally rising market while protecting capital and potentially profiting from a falling market.
- How do you go about selecting your investments? Any preference for small, mid or large-cap stocks?
Stock selection is a combination of fundamental research and technical factors for measurement of market sentiment and for timing purposes. As a rule there is no attempt to pick highs or lows on stocks. Sentiment confirmation is sought before investing. The fund will usually hold a core group of medium-term holdings (10 to 25 stocks) but will trade around these positions as well as take short-term views on the market. Core holdings will usually equate to 30 to 70% of total funds under management.
- Investment timing is one of the most crucial factors for making a successful investment decision. How do you take care of that?
Investment timing is largely technical and news driven. The overall direction of the sector and the market is also considered critical. We are cautious about swimming against the tide.
- What is the exit strategy for your investments? Do you have any predefined standards for that?
Capital protection is considered vital and as a result downside is pre-determined on individual trades and managed in accordance with those limits. These will only be over-ridden when there is an exogenous, all encompassing market shock. In relation to profits, shorter-term trades will usually have target levels while core positions will be handled more via trend following techniques.
- How strong is your research on companies in which you invest? How often do you conduct company visits, attend industry seminars, etc?
Fundamental research is used largely through individual company records and broker reports. Company visits are conducted and we leverage off the expertise of our three in-house analysts. However we remain highly conscious of becoming too close to individual situations. The fund is more concerned with robust risk management controls rather than one-off stories.
- Your fund has generated an annualised return of 18% since inception. What would you attribute as the most crucial factors for this commendable performance?
Capital protection, discipline, a variety of information sources, relationships with other fund managers, flexibility.
- Could you tell us about your prior investment experiences and how does the fund benefits from it? Who are the other key members in your team? What experiences/skill sets do they bring with them?
Original market training was purely in the derivatives markets, hence the fact that the concept of shorting stocks to profit during market declines is seen as second nature. I have been practicing professionally in the Australian equities market for over ten years as an investor, advisor and fund manager.
Tricom Investment Management has built an experienced team of managers, analysts and support staff. We are able to leverage off the expertise of these individuals enhancing all facets of the fund and allowing me to focus on what I do best.
- What makes you different from other Aussie long/short hedge funds?
The belief that the stockmarket is inherently a wealth creation vehicle means that in general the fund will maintain a long bias. It is not 'market neutral'. Shorting is used sparingly as a rule and the fund will rarely be net short unless we are in a protracted period of negative market returns, ie 2001 and 2002.
- You have a lot of open capacity in your fund size. How do you plan to fill it? Apart from local Australian investors, are you targeting other markets to raise additional capital? Any plans to travel in this regard?
Up to this point no active marketing of AGS fund has been in place. We have felt it important to build a solid foundation before seeking large sums of capital. We have used this base building period to develop our track record and importantly the systems and people to support a rapid move to the next phase in our development, which we are now undertaking.
In the coming months we intend to build momentum with our marketing, speaking to local and overseas investors, FOFs, family offices and other sources of capital.
- Going forward, what are your views on the Australian equities market for the rest of 2005?
The market remains reasonably attractive in comparison to other domestically available asset classes such as bonds, property and cash. As a result we continue to have a positive disposition and wish to stress that we do not attempt to pick market tops and bottoms. A positive bias will be maintained until returns evaporate. Having said that, we are conscious that the last reporting season contained many areas of weakness which are not fully reflected in the current strength of our top-heavy weighted indices.