Fund at a Glance
As at 31/12/19
Fund size (mil)$51.0
Net Equity Exposure2.7%
The investment returns depicted in this graph are cumulative returns on A$100 invested in the Watermark Market Neutral Trust relative to the return on an equivalent cash investment at the RBA Cash Rate for the specified period. Fund returns are net of all fees. The date of inception for the Watermark Market Neutral Trust is August 2012. Prior to this date, fund returns have been constructed using the return series from the long and short portfolios of the Australian Leaders Fund, in a market neutral structure. Reconstructed returns have been audited for accuracy but do not reflect actual returns of the Fund. The investment returns shown are historical and no warranty can be given for future performance. You should be aware that historical performance is not a reliable indicator of future performance. Due to the volatility of the underlying assets of the Fund and other risk factors associated with investing, investment returns can be negative (particularly in the short-term)
About the fund
A market neutral fund allows investors to benefit from Watermark’s success in identifying “strong” companies to invest in and “weaker” companies to sell without being fully exposed to the volatility and risks of the share market.
Generally speaking the share market is highly efficient and most companies are fairly valued. At any point in time however, there will always be a select group of companies that are mispriced- either cheap or expensive based on our assessment of value. In a Market Neutral structure we look to profit from the mispricing of shares by taking advantage of the natural hedge between long and short positions. The structure is very simple. The investment portfolio of shares we favour is funded from the proceeds of selling ‘short’ the shares of companies we dislike. The ‘longs’ and ‘shorts’ are approximately of equal value, minimising exposure to general market movements, while our investor’s capital is retained in cash earning interest (there may be a degree of net market exposure, but this will be managed so it does not exceed 10% of capital).
The performance of the fund will be the interest on the cash at bank plus the difference in the performance of the two portfolios. The fund will profit to the extent that the longs outperform the shorts, irrespective of the the performance from the underlying share market.
As a unit trust, your investment is exchanged for Units in the fund, which represent your proportionate share in the value of the net assets of the Fund. Unit prices are calculated daily based on the aggregate market value of the fund’s assets and liabilities.
The fund is a registered managed investment scheme, issued by Equity Trustees Ltd as independent responsible entity.