Inside the Rope with David Clark

The Totus Capital Alpha Fund is up 9% CYTD for 2020, during a period when global equity markets have rerated significantly. Throughout the episode, Ben discusses the opportunities he believes are being created in markets, and the short term trends that have been created by the virus. Similar to our previous guest John Hempton, Ben argues that this is a virus issue at its core which cannot be solved through central bank intervention. Ben also discusses the ongoing management of Totus' book, which may contain circa 80 shorts and 40 longs on any given day. As well as his outlook on BNPL (Buy Now Pay Later) platforms, proposed rental concessions and other impacts across the different age demographics. The Totus Alpha fund has been running since 2012, and up to the end of Feb 2020 has returned 17.4% p.a. (net of all fees).

Join John Hempton, an equity manager at Bronte Capital known for his insightful investment strategies, as he discusses the real crisis facing markets: COVID-19. He argues that central bank stimulus won't solve a virus problem—scientific intervention is essential. The conversation highlights stark differences in how countries are managing the pandemic. John shares how his fund thrived during market turbulence, advises investors to adopt a long-term view, and underscores the importance of prioritizing public health over financial fixes.

Chris joins David in this special episode to discuss the Coronavirus, housing markets, private debt and LIC stamping fees. Chris is of the view that the increased market volatility presents opportunities for investors, however they must be cautious. He highlights the implications on financial markets posed by Coronavirus and speculates that whilst the Chinese may surprise with an early vaccine we should conservatively assume that it will be 12+ months away. Given this and current market expectations, Chris believes that the RBA will likely cut the cash rate by 25bp in April and will begin QE in a matter of time... and as it's almost Un-Australian to discuss cash rates without a mention of property, Chris is expecting Australian property prices to rise anywhere from 20% to 30% throughout the cycle (trough to peak, including the 10%+ we have already seen) but believes that an inflationary cycle could see them rapidly rerate down by up to 40%.

Investing in growth opportunities that present themselves as emerging winners, Jeff backs the individuals behind what he identifies as a successful business. He is well known as an early backer of both Magellan Financial Group (MFG) and Goodman Group (GMG) and his fund is currently the largest shareholder of Pointsbet (PBH). With the firm belief that everything you do in life makes you a better investor, Jeff highlights how the experiences he has gained throughout his career as an accountant and as a top-rated equities analyst who became the Head of Equities at UBS in Sydney has provided him with the foundation upon which he invests. EFM Asset Management is a growth oriented global equities asset manager that specialises in managing listed global equities and has a particular focus on quality growth investments.

Deriving uncorrelated returns to traditional asset classes, as at January 2020 the Argyle Water Fund has returned 19.1% p.a. since inception (2012) by investing in water rights across Australia. Returning to the podcast for a second time, Kim joins David to discuss the fund's change in banner from Bluesky to Argyle along with other topics such as the recent bushfire crisis that has been ongoing across Australia, as well as the impact of different climate conditions on Australia's water supply. A vast majority of the Fund’s capital is exposed to the river systems of the southern Murray-Darling Basin including the Murray, Goulburn, Murrumbidgee and Lachlan.

The Ophir Opportunities Fund has returned 26.1% p.a. since inception in August 2012 (net of fees) and their latest Global Opportunities Fund has returned 33.8% p.a. since inception in October 2018 (net of fees). Andrew attributes the success of Ophir's funds to their commitment of keeping their finger on the pulse, travelling a lot, meeting companies, learning from their mistakes and creating a strong alignment of interests between the team and their funds. In Andrew's words "I do not own a couch, I don't own cushions on a couch, I don't even own a bed. I own sheets, I own pillows, I own cutlery, I own clothes and I own a lot of units in the Ophir funds."

Targeting what Roger refers to as 7/11 (7% income and 4% growth), Palisade's Diversified Infrastructure Fund has returned 10.2% p.a. over the last 10 years (as at 30 June 2019).   Roger defines infrastructure as a defensive asset that is essential for the community, and in this episode, Roger and I discuss how Palisade are finding such assets across Australia. Roger also takes the time to highlight the importance of such assets to Australia and consequently why he believes infrastructure is a defensive asset class.   Palisade which began under the Perpetual banner is the owner of assets such as the Sunshine Coast Airport, the fastest growing airport in Australia and specializes in defensive infrastructure assets.

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.

Sometimes presents that may be perceived as "boring" can eventuate into the most exciting gifts that you have received. The Magellan Infrastructure Fund invests in listed assets with exposure to sectors such as toll roads, airports, rail and utilities. Gerald describes these assets as highly reliable, predictable and boring. However, Gerald and I discuss how investing in such assets has allowed the fund to return 20% during the last 12 months and generate returns of over 14% p.a. during the last 10 years (as of November 2019). Gerald mentions that the fund is not designed for individuals to get rich quick, but rather to generate wealth with a high degree of confidence. The fund targets long term returns of inflation + 5%, with low downside capture. The Magellan Infrastructure Fund manages around $8.5bn and is invested in listed infrastructure assets around the world.

Kee explains how property assets with yields of 7-9% are being found across the UK as Brexit fears have reduced competition for certain assets. Kee also covers the UK election and what it means for their property market. L1 UK Residential Property Funds focus on assets with purchase prices of £3-10m a bracket that is separate to that of large institutions who typically target assets of greater value. The fund invests in tier one cities outside of London and South-East England where valuations are only now reaching the same levels as '07. Competition in the UK is further reduced as banks are limited in their ability to invest in similar assets, in part due to the EU Mortgage Market Review. Kee mentions that tighter lending controls have meant that 68% of individuals in the UK that are renting don't own a home because they can't afford the deposit.