Alleron’s Long Short Fund, which returned 1.50 per cent for the March quarter compared to a 3.90 per cent fall in the ASX 100, has announced a few portfolio changes.
The fund said it marked the second quarter since inception when it had delivered a positive return in a falling market. At the same time, net return after fees since inception reached 41 per cent compared to the market return of 18.43 per cent.
According to the fund, in the March quarter the Australian market fell as international markets saw increased volatility from trade war tensions between China and the US.
Also, subdued Chinese construction activity resulted in volatility in the iron ore price and other related commodity prices, while big banks remained under pressure from the Royal Commission.
As far as the portfolio was concerned, the fund decided to increase its exposure to Computershare due to its strong revenue growth and economies of scale in the US and UK mortgage services divisions.
The fund also lifted its exposure to Sims Metal Management, with the company’s operations supported by a strong US economic outlook, and to Santos which continued cost cutting and divestment of non-core assets to reduce its risk profile in a volatile oil price environment.
At the same time, the fund would decrease its exposure to Nanosonics due to its slower international growth and the company’s “sluggish adoption rates in newer territories”.
Two other companies that would also see lower exposure were Downer EDI and Spark Infrastructure.
The fund would decrease its exposure to Downer EDI due to the loss of key mining contracts and decreased potential for earnings growth, while Spark Infrastructure saw high gearing which would leave its dividend vulnerable to a potential rise in interest rates.
