Insights

Webinar Recording: Navigating turbulent times and portfolio positioning (Recorded 16 April 2020)

Market Insight
April 20, 2020
Both the CC Sage Capital Equity Plus Fund and the CC Sage Capital Absolute Return Fund have received a ‘recommended’ rating from Zenith Investment Partners.

The CC Sage Capital Equity Plus Fund is an active extension long/short strategy that takes both long and short positions where the proceeds from the short positions are reinvested in long positions to retain exposure to the equity market and typically holds between 100-120 positions. Since the launch in August 2019, the CC Sage Capital Equity Plus Fund has delivered 5.27% net of fees to 31 December 2019, outperforming its benchmark (S&P/ASX200 Accumulation Index) by 1.47%.

The CC Sage Capital Absolute Return Fund is a market neutral or absolute return strategy where short positions and long positions offset each other, giving investors exposure to Sage Capital’s stock selection skills while eliminating exposure to the underlying equity market, and typically holds between 100-120 positions. Since the launch in August 2019, the CC Sage Capital Absolute Return Fund has delivered 1.94% net of fees to 31 December 2019, outperforming its benchmark (RBA Cash Rate) by 1.63%.

Managing Director and Chief Investment Officer Sean Fenton said “The strategies are designed to generate alpha over the long term through our investment approach that uniquely combines fundamental and quantitative analysis. We seek to provide a solution for investors to help lower correlation to equity markets by holding both long and short positions – in a risk-controlled way.”

In its research report Zenith noted the confidence it has in the Sage Capital investment team and its long-standing investment process to deliver upon each of the Funds’ investment objectives. In particular, the way in which Sage Capital targets an equal contribution to active risk arising from the quantitative and fundamental process. The two processes are conducted independently to ensure that biases are not introduced into either process. Overall, Zenith believes the blended quantitative and fundamental processes are complementary.

“This independent endorsement further validates the strength and cohesion of our experienced investment team, as well as the robustness of our investment process − evidenced by both Sage Capital funds achieving their performance objectives, since inception.”

In the current volatile market environment, employing a long/short strategy may prove to be a good additional diversifier of long-only Australian equities exposures. Our ability to short companies removes the constraint around index weights. The distribution of weights across the index becomes irrelevant and we have the freedom to choose portfolio weights for stocks that are independent of the index weight, subject only to liquidity. A long/short portfolio can achieve active return targets with a far more diversified portfolio of stocks. The greater diversification resulting from this can mean a better risk/reward trade-off and potentially more consistent returns to investors over time.” Mr Fenton said.

Backed and supported by boutique incubator Channel Capital, Sage Capital was formed in June 2019 and is 100% owned by its investment team. Both funds are open for investment and may suit investors with a medium to long term investment horizon and who seek to complement existing long-only Australian equities portfolio exposures.

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) ratings (assigned 17 January 2020) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice.  It is not a specific recommendation to purchase, sell or hold the relevant product(s).  Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs.  Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website.  Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments.  Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at https://www.zenithpartners.com.au/our-solutions/investment-research/fund-research-regulatory-guidelines/
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