August, 2023
Performance was notably positive during a month marked by declines in both domestic and global equity markets. This underscores our commitment to achieving a smoother and more consistent return profile for our portfolios.
The standout contributors to our performance included our liquid alternative strategies, particularly the P/E Global FX Alpha Fund, which delivered an impressive return for the month driven by a short position on the Australian dollar. Additionally, the Crown Diversified Macro Fund made a significant positive contribution.
Among our global equity managers, our listed infrastructure exposure lagged due to the impact of higher real yields on performance. However, the Atrium Global Equities Mandate, managed by Magellan, and the Fairlight Global Small and Mid-Cap Fund delivered robust positive returns for the month.
In the realm of Australian equities, the Atrium Equity Opportunities Fund posted positive results despite a negative index return, with Carsales.com being a key contributor to this performance. Overall, our rates and credit managers performed admirably, with the JP Morgan Global Strategic Bond Fund being the only notable detractor from returns.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-21.pdfJuly, 2023
The commencement of the new fiscal year witnessed the continuation of a robust upward trend in global equity markets. During this period, the Fund registered a favourable performance, largely attributed to the contributions from equities.
Among equities, both domestic and international stocks yielded substantial gains throughout the month. Standout performers included Fairlight Global Small and Midcap Fund, Hyperion Global Growth Companies Fund, and Antipodes Global Fund – Long Only. The latter effectively capitalized on a vigorous recovery in emerging markets and cyclical stocks. On the other hand, certain areas of our listed infrastructure exposure struggled to keep pace, as investor sentiment shifted towards growth and cyclical stocks while steering away from defensive assets.
The performance of our liquid alternative investments exhibited a more varied pattern. The Crown Diversified Macro Segregated Portfolio achieved positive returns, while our risk premia and currency strategies experienced a downturn over the same period. Our recent venture into insurance bonds has proven to be fruitful thus far.
Our rates and credit managers demonstrated commendable performance within an environment marked by narrowing credit spreads and declining government bond yields. Our higher yield investments in KKR Global Credit Opportunities Fund and CQS Credit Multi Asset Fund, continued to excel. Notably, these funds generated robust double-digit running yields, contributing significantly to our overall performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-20.pdfJune, 2023
The Fund concluded the financial year on a strong note, achieving solid returns in the last quarter. The primary driver behind this performance was global equities, complemented by notable contributions from liquid alternatives and private markets.
Regarding growth allocations, our decision to overweight global equities compared to domestic equities continued to yield positive results. The standout performer during the quarter was the Hyperion Global Growth Companies Fund, which excelled due to its positioning in mega-cap US technology and consumer discretionary companies like Tesla and Amazon. These holdings played a crucial role in driving market performance during this period. However, it's worth mentioning that in a market driven by a limited set of stocks, some of our global equity managers, such as Antipodes Global Long Only and Northcape Global Equities, lagged the broader index. On the contrary, our global small and mid-cap manager, Fairlight, outperformed its benchmark as underlying companies delivered solid revenue and earnings even in a slowing economy.
Additionally, our Global Equities mandate managed by Magellan delivered a strong performance in line with global markets throughout the quarter.
On the other hand, our listed global infrastructure exposure continued to lag due to rising real interest rates, which acted as a hindrance for long-duration assets.
In terms of domestic equity exposure, the performance was mixed during the quarter. The Atrium Equity Opportunities Fund fell behind its benchmark primarily because it had an overweight allocation to defensive sectors like Consumer Staples, Infrastructure, and Healthcare. Treasury Wine Estates and CSL were the key detractors during this period, with CSL announcing a slight downgrade to earnings. Pilbara Minerals added to relative returns and two recent additions, Carsales.com and Worley, were also positive contributors. The SGH ICE Fund delivered positive performance as smaller companies outperformed their larger equivalent after a period of underperformance.
Our liquid alternatives exposure made a positive contribution to our performance throughout the quarter and continues to fulfill its role as a portfolio diversifier. Notably, the Crown Diversified Macro Fund benefited from strong performances driven by its underlying trend-following strategies. Similarly, the P/E Global FX Alpha Fund performed well due to its long US dollar and short Yen positioning. On the flip side, our recently added Commodity Long/Short strategy faced challenges in an environment where macro and micro influences on prices conflicted.
The allocation to private markets within the portfolio has continued to meet our expectations with a number of positive revaluations over the calendar year. Given the backdrop of more difficult trading conditions in the sector (particularly commercial real estate), we remain diversified across sectors and geographies which in our opinion will position us favourably as asset values, particularly in lower-grade commercial properties in major East Coast capital markets, face increasing pressure.
Regarding our rates and credit exposure, the majority of our managers had a positive performance during the quarter as credit spreads tightened, resulting in rising prices. Particularly noteworthy were the positive performances of our predominantly noninvestment grade exposures managed by CQS and KKR. On the downside, our small interest rate duration exposure was affected by the significant rise in US and Australian bond yields.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5j.pdfMay, 2023
As global markets continue to navigate an environment of rising interest rates and sticky inflation, the portfolios continue to be positioned well in this environment. Pleasingly, our liquid alternatives strategy continued to play the diversifier role while also delivering strong risk adjusted returns, with the majority of our managers positive for the month. The liquid alternatives allocation was the major positive contributor to performance over the month due to P/E Global FX Alpha benefiting from a long US dollar position, followed by trend and macro strategies performing well. Offsetting the strong returns in Alternatives, Australian equities underperformed along with listed infrastructure.
Global share managers allocations were marginally positive, outperforming the global share indices. Within our global equity sleeve, Hyperion Global Growth Companies was the standout yet again given the recent tech rally. Our exposure to Global Small and Mid-Cap equity manager Fairlight also delivered a positive return during the month, as quality equities overall continue to perform well. The Atrium Equity Opportunities Fund was a detractor from performance, with Treasury Wine Estates suffering from an earnings downgrade.
File:April, 2023
Global markets continued to climb despite global central bank rate hikes, regional bank failures in the US and looming recession worries. All of the Fund’s underlying sectors contributed positively to performance for the month, with global equities the standout. The majority of our equity managers outperformed their respective benchmarks over the month.
Their focus on quality companies has been rewarded by markets in the last few months as investors sought safer havens with a global slowdown beckoning. Standout performers over the month included our global equity mandate managed by Magellan and the Northcape Global Equities Fund.
Within liquid alternatives, it was pleasing to see the strong recovery amongst our trend following strategies as heightened volatility and dispersion between markets and sectors continued to enhance their opportunity set. The key driver of performance within the sleeve was the Crown Diversified Macro Segregated Portfolio, with positive drivers from positions in sugar and Yen.
File:March, 2023
The first quarter of 2023 has proven to be quite tumultuous, with bond markets in particular showing levels of volatility unseen in decades. While global equity markets finished the quarter higher, the risk of recession is rising as higher interest rates slow economic activity and corporate earnings.
The Fund was positive for the quarter on the back of the allocation to global shares, global credit, private markets, and Australian shares. All asset classes contributed positively to performance over the quarter, with the exception of liquid alternatives which gave back some of the strong returns generated in 2022. Within our Growth allocation, global equities were a strong positive driver of returns with standouts including Hyperion Global Growth Companies Fund which delivered a stellar 30% return on the back of holdings in Tesla, Spotify, ServiceNow and Airbnb. The was complemented across our other global equity managers, all performing strongly with the pivot towards quality companies rewarded.
The Fairlight Global Small and Mid Cap Fund outperformed its benchmark by almost 5% in March alone. Offsetting this was our allocation to Australian equities which modestly underperformed the benchmark over the quarter. Key positive contributors included Woolworths, toll road operator Transurban, and gold miner Northern Star, while detractors included Domino’s Pizza which reported a weaker than forecast result. Within our Diversifiers allocation, the unprecedented volatility notably in the bond market caused many of our trend following strategies to rapidly adjust positions. Many of these strategies were positioned for a further bond sell-off, just as the regional banking crisis emerged in the US. This highlights one of the benefits of these strategies which is the ability to move to cash in an uncertain environment. On the other side of the ledger, our discretionary long short manager Zebedee Capital Partners performed well, helped by a welltimed European financials exposure, while our currency strategy P/E Global FX Alpha Fund and risk premia strategy Two Sigma Alternative Risk Premia also delivered positive returns over a very volatile quarter. Our private markets exposure continues to perform well and deliver strong risk adjusted returns. Our investment in refurbishing 388 Hay Street in the upmarket Perth suburb of Subiaco, has delivered positive results, with a large majority of the site now leased at substantially improved terms from an income and leasing profile perspective. This has delivered an uplift in asset valuation and will see capital returned to the Fund. The investment team have continued to focus on developing the pipeline of investments which we expect to crystalise within the next two quarters. These include opportunistic value add realestate projects, infrastructure assets and unlisted debt exposures. Within our Preservers allocation, our exposure to a range of credit strategies delivered a solid return over the quarter as government bond yields gyrate and credit markets remain volatile. Key contributors to performance included the Ardea Real Outcome Fund which benefitted from the rise in volatility across bond markets, while Kapstream Absolute Return Income Fund was also positive as its bias towards the defensive end of the market was rewarded. Although our two higher yielding credit managers (KKR Global Credit Opportunities Fund and CQS Credit Multi Asset Fund) were positive over the quarter, this masked a very difficult March.
Overall, our bias towards high quality companies has the Fund well positioned to take advantage of quality assets at discounted prices as they present.
File:February, 2023
The optimism of January gave way to realism in February, as markets digested news that inflation was “stickier” than first thought and that global central banks would need to lift interest rates higher than anticipated for a much longer period to rein in price growth. Whilst domestic equity and bond markets were lower for the month, the Fund was able to generate a positive return, highlighting the importance of genuine diversification. The contributors to performance included liquid alternatives, rates and credit and global equities, with the majority of our global equity managers delivering a positive return over the month.
Positive contributors included P/E Global FX Alpha Fund, which benefitted from the sharp rise in the US dollar, and the Hyperion Global Growth Companies Fund which performed well on the back of a continued strong rise in Tesla. The main detractor to performance included the Atrium Equity Opportunities Fund, which was negatively impacted by both BHP Group and Domino’s exposure.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-19.pdfJanuary, 2023
The Fund was positive in January as markets showed a significant bounce after a torrid 2022. The key driver of performance was equities, which performed exceptionally well as the case for an economic “soft landing” was revisited with inflation looking to have moderated globally. Investments within rates and credit as well as private markets also contributed to positively to performance, while our liquid alternatives exposure was the only detractor.
Within rates and credit, CQS Credit Multi Asset Fund and JP Morgan Global Strategic Bond Fund were the best performers (within the Atrium Enhanced Fixed Income Fund) as both high yield bonds and loans rallied on the back of renewed optimism in global markets. Amongst our equity exposures, the Atrium Equity Opportunities Fund performed broadly in-line with the market, while the Hyperion Global Growth Companies Fund delivered more than 10% above benchmark for the month after a very strong rebound in both Tesla and Amazon.
Our allocation to global equities significantly outperformed the index, with the Antipodes Global Fund – Long continuing to perform exceptionally well. Within our diversifiers, a number of our underlying exposures gave back some of last year’s strong performance as markets aggressively rebounded. These managers had largely been positioned for a weaker macro environment which worked against them in January. Key detractors included the Crown Diversified Macro Segregated Portfolio and P/E Global FX Alpha Fund.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-18.pdfDecember, 2022
2022 closed without a Christmas rally for investors, as global equity markets partially retraced solid performances from earlier in the quarter. Bond markets were also positive in aggregate over the quarter, as yields fell on the back of falling inflation expectations and central banks remained steadfast in combatting inflation. During the quarter, all asset classes contributed positively to performance, excluding liquid alternatives which gave back some performance after a strong calendar year.
Amongst our preserver allocations, the key positive contributors to performance included Kapstream Absolute Return Income Fund, JP Morgan Global Strategic Bond Fund and CQS Credit Multi Asset Fund. Credit markets performed well over the quarter, in tandem with equities. Lower rated corporates performed particularly well on the belief balance sheets would withstand the current economic environment. Our liquid alternatives exposures which proved to be a key ballast for portfolios over the calendar year, retraced some performance. Our trend following strategies were negatively impacted by reversals across some markets – especially the US dollar, but nevertheless they finished the year with positive returns.
P/E Global FX Alpha Fund was the key detractor to performance for the quarter and was negatively impacted by a long US dollar and short Euro position. The Crown Atrium Segregated Portfolio (allocated to European long-short manager Zebedee Capital Partners) was positive over the quarter with well-timed exposures to European consumer discretionary and global materials. Private markets exposure has continued to compound positive returns. During the quarter, three new investments were undertaken. This included participating in a syndicate to acquire an A-grade office tower in Perth, loan facilities for a natural resources development and to finance the off-take and sale of renewable energy. These new investments took advantage of the tight capital markets to acquire assets or provide loans at favourable rates. Within our growth allocations, the standout for the quarter and year has been Antipodes Global Fund - Long which benefitted from outperformance across Cyclical and Industrial stocks along with its bias towards both Asian and European stocks. Northcape Capital Global Equities Fund was also a solid performer over the quarter.
The Atrium Equity Opportunities Fund delivered a solid return for the quarter (although underperformed the broader market), with BHP the largest positive contributor, along with Commonwealth Bank. Commodities have been the key reason for Australia’s equity market outperformance for both the quarter and year. The SG Hiscock ICE Fund, unfortunately lagged noticeably over the quarter, as its lack of resource exposure and bias towards small and mid-cap stocks was not rewarded by the market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-17.pdfNovember, 2023
The Fund was slightly lower over the month as the strong bounce in equities was offset by the liquid alternatives sector, which gave back some of its recent strong performance. Notably, currency and trend following strategies were negatively impacted by a reversal in key trends in the US dollar and Bonds. Notwithstanding this, the alternatives sector has played an exceptionally important role in reducing volatility at the overall portfolio level.
The positive contribution from equities was largely driven by the Atrium Equity Opportunities Fund which returned 5% for the month. BHP had a strong November on hopes of China’s re-opening, while City Chic detracted from performance. The domestic equity market, due to its exposure to resources and to some degree banks, has outperformed global equity markets in 2022. Within global equities, most of our managers beat their respective benchmarks for the month, as quality companies with high profitability outperformed both value and growth names. Antipodes Global Fund – Long, returned 6% for the month, benefitting from a rebound in Chinese and Emerging Market stocks.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-16.pdfOctober, 2022
After a tumultuous period for markets over the previous quarter, it was pleasing to see the Fund deliver positive performance over the month, capitalising on returns as global equity markets rebounded strongly.
The key driver of positive returns for our portfolios was the allocation to global and domestic equities, with liquid alternatives and rates & credit also contributing to positive performance. The equities portfolios managed by Northcape Capital, Magellan through the global equity mandate, and the listed infrastructure mandate (also managed by Magellan) rebounded strongly from a challenging September.
The Atrium Equity Opportunities Fund was also positive over the month. Our allocation to liquid alternative strategies has continued to compound positive returns with the Crown Diversified Macro Segregated Portfolio performing well on the back of underlying global macro strategies where interest rate and currency positions added value. The allocation to trend following strategies gave back some of the recent strong performance as recent trends reversed.
During the month there were no major portfolio changes, but we did take advantage of the strong market conditions to modestly trim our equity exposures back in line with our targets. Overall, we have positioned the Fund with higher cash allocations and the overall equity exposure continues to be positioned towards the lower end of our historical range.
We view the current investment environment as highly uncertain and remain defensive and diversified in our positioning. This extends to our protection positions which have been placed on the S&P 500. These play an important role in defending returns if markets were to fall further.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-15.pdfSeptember, 2022
The September quarter was a challenging environment for the traditional asset classes of equities and bonds with major headwinds from rising inflation and slowing economic growth. Despite this, the Fund’s diversification helped smooth returns and highlighted the benefit of true diversification in times of market volatility.
Liquid Alternatives (along with cash, private markets, and protection strategies) have been the ballast of the Fund in this turbulent period. The key drivers of performance within this sleeve included our global macro allocations in the Crown Diversified Macro Segregated Portfolio. Long positions in the US dollar and a short position in bonds provided strong contribution to this strategy’s returns. Our alternative risk premia strategy Man Alternative Risk Premia was also a solid contributor, while our managed currency exposure P/E Global FX Alpha Fund has continued to deliver stellar returns, returning over 14% for the quarter on the back of a long USD position, and short Euro and Yen positions.
Equities were mixed over the month. The Atrium Equity Opportunities Fund was higher over the quarter on the back of strong performance from BHP, Pilbara Minerals and ResMed, while our interest rate sensitive exposures such as Transurban and Atlas Arteria were detractors. In global equities, the Hyperion Global Growth Companies Fund outperformed the index with positions in Tesla and Amazon adding value, while our other global equity managers were modestly lower over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-14.pdfAugust, 2022
The Fund was positive over the month, in contrast to falls in global equity and bond markets, with our focus on risk and diversification helping to preserve capital.
The key driver of positive returns for our portfolios was our allocation to liquid alternatives, which has been an outstanding diversifier in a period where traditional asset class returns have been negative. Key standout performers included the P/E Global FX Alpha Fund and the Crown Diversified Macro Segregated Portfolio. Our rates and credit managers were higher in aggregate, led by our allocation to the CQS Credit Multi Asset Fund which invests predominantly in the loans and high yield bond markets. Our global equity managers were all lower over the month, while our domestic share allocations fared better as the investments in both the Atrium Equity Opportunities Fund and SGH ICE Fund were positive.
There were no major portfolio changes over the month. During the period, we increased protection in the portfolio through the purchase of call options on US Treasury Bonds, which should provide positive returns if risk markets sell off and bonds rally. We have also taken profit on our US S&P 500 put options and extended the expiry into October.
We remain active in seeking out opportunities to ensure the portfolios are well diversified with robust strategies to deliver to both our return and risk objectives in this environment. To this end, the team have conducted due diligence across a number of liquid alternative strategies, although no changes have been made at this stage. Overall, the Fund remains defensively positioned, with higher cash allocations and equities towards the lower end of our historical range. Our focus on capital preservation takes front and centre across our portfolios in the current market environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-12.pdfJune, 2022
The Fund’s Risk Targeted approach delivered a smoother return profile in an environment where both equity and bond markets endured heavy falls and many peers had large drawdowns. Pleasingly, our longer-term track record continues to track in excess of our objectives while managing fund volatility within limits and delivering clients a smoother and more consistent return profile.
The Fund’s exposure to liquid alternatives, private markets and the US dollar all delivered positive returns over the quarter, while our low exposure to interest rates and our focus on higher quality investment grade credit protected the Fund against the brunt of the rise in global government bond yields and corporate credit spreads. The standout performers over the quarter included our liquid alternatives allocations, which in aggregate were able to take advantage of volatility across global markets and deliver solid positive returns.
The P/E Global FX Alpha Fund delivered over 18% for the quarter on the back of a long position in the US dollar and corresponding short positions in the Euro and Yen, while our trend following exposures have continued to provide a positive tailwind to the portfolio on the back of long exposure to rapidly rising energy markets and short positions in rapidly declining bond markets. Across our private markets allocation, the last quarter saw us harvest further private debt investments in the property and asset finance space. Whilst volatility persists in equities and fixed income markets, the defensive nature of private debt investments continues to deliver expected returns.
The pipeline of deals continues to be strong, however whilst markets adjust we have held off deploying fresh capital into new deals this quarter. Under a backdrop of stress in government bond markets, our preserver allocation was only modestly negative in aggregate during the quarter. We have navigated this period through our active positioning of the portfolio, maintaining exposure to floating rate corporate bonds and relative value strategies, rather than holding traditional fixed income strategies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-11.pdfMay, 2022
The Fund was modestly lower over the month as it faced the combined headwinds of rising inflation and the first lift in the cash rate by the RBA in over 10 years. This uncertainty has continued to create a difficult environment for equity managers, in contrast to the very strong performance seen over the past few years.
Global and domestic equities were lower over the month. Antipodes Global Fund – Long, continued to stand out (posting a positive return), while the Hyperion Global Growth Companies Fund lagged in an environment where a number of their underlying technology holdings have de-rated. The Atrium Equity Opportunities Fund outperformed the index over the month, on the back of positive performance from both Treasury Wine Estate and Westpac.
After a very strong period of performance in April, our liquid alternative managers gave back some performance over the month. P/E Global FX Alpha which trades in currency markets was particularly impacted by a falling US dollar (albeit after delivering very strong results in April), while our preserver allocations lagged as credit underperformed in an environment of rising yields and slowing growth.
Under this backdrop of uncertainty, the investment team have been active, positioning the Fund across a range of diversifying investments. We also believe that during periods of rising interest rates and elevated inflation, it is prudent to maintain elevated liquid assets as opportunities will undoubtedly emerge in a more volatile investment environment. The Fund has modestly increased its allocation to both cash and diversifiers over the month (reducing global equities) as current macro environment risks are increasingly skewed to the downside and the preservation of capital becomes more important at this point in the cycle
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-10.pdfApril, 2022
In a month that was challenging for equity and traditional multi asset funds alike, the Fund delivered a positive return in April on the back of solid performances from its liquid alternative managers, while also generating strong outperformance within the global equity segment of the portfolio. As highlighted in previous commentary, traditional allocations to equities and bonds were likely to be challenged in a higher inflationary environment. This has now proven to being the case as global government bond indices as well as global share markets both fell over the past quarter, with April particularly impacted. This contrasts with our allocation to diversifying assets such as liquid alternatives which were the main contributor to returns in April and the key reason the Fund’s performance remained in positive territory over the month. Examples of strategies that provided stellar performance include the P/E Global FX Alpha Fund which benefited from the strongly performing US dollar, along with our exposure to trend following strategies within Crown Diversified Macro Segregated Portfolio and One River Systemic Trend. These were both on the right side of the continued rally in commodity markets and falls in global bond prices. While equity markets were challenging over the month, both Antipodes Global Fund - Long and the Global Listed Infrastructure mandate (managed by Magellan) were able to deliver positive returns, with the latter in particular performing well as investors moved back towards more defensive names – such as those within the utilities sector. Our allocation to the Hyperion Global Growth Companies Fund was the only global manager to underperform as a number of its quality technology holdings were sold down over the month. Within domestic equities, the Atrium Equity Opportunities Fund fell as investors fear that the RBA may raise interest rates too aggressively (in early May the RBA raised interest rates by 25bps) – this negatively impacted a number of domestic consumer stocks such as Lovisa and City Chic.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-9.pdfFebruary, 2022
Australian equities actually gained 2.1% over the month, with small caps flat. However here there was also considerable disparity below the surface. Contributing to the strong month was a significant gain in Energy (+8.6%) and Resources (+6.4%). The clear driver of much of this move was the Russian impact on commodity prices, although the earnings season was supportive for a number of larger resource companies. The Banks rose 4.0%, although are still negative on a 6-month view. Consumer Staples were also strong (+5.6%). What each of the aforementioned sectors has in common, which has provided some support in a period of rising bond yields, is that they are seen as Value sectors. Information Technology, a Growth sector, and right at the other end of the Value / The growth spectrum was the weakest sector, at -6.6%, seeing it down by -18.5% on a 12-month view, although the IT sector is not large on the ASX. Consumer Discretionary was weak down -5.0% for the month.
Liquid Alternatives were a positive contributor to performance over the month, especially our macro and systematic strategies that have been able to take advantage of large moves in commodities and interest rates markets. Periods of elevated volatility can work well for many of our liquid alternatives managers, as the opportunity set increases and markets move from one extreme to the other. The performance of these positions during periods of unrest is one of the reasons why we focus on diversification within the portfolio.
Our rates and credit allocations were modestly lower over the month, as the geopolitical risks led to wider credit spreads across the globe, especially amongst non-investment grade credits. We remain positioned for higher bond yields globally, with little exposure to higher interest rates.
The Fund has direct exposure to Gold which should benefit from geopolitical uncertainty, and we are also active in markets to protect against market falls, providing the potential to preserve capital and increase exposure at much lower valuations. Our view remains unchanged that returns in traditional asset classes may come under pressure as we move into an environment of higher volatility driven by either geopolitical risks or inflationary concerns. The Fund holds a diverse array of strategies that could perform well across a number of market environments. We continue to manage the portfolios dynamically to actively manage downside risks as well as position for opportunities that will emerge in this current period of elevated volatility
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-8.pdfJanuary, 2022
As we entered a new year, concerns around inflation and rising interest rates created a spike in volatility across investment markets – with equities bearing the brunt of the falls. While our portfolios have been positioned with a higher level of cash and portfolio protection through derivatives, some of our equity managers were not immune to the market volatility. The portfolios are predominantly allocated to active strategies across Australian and global equities and we saw mixed results across these sectors. On the positive side, we saw very strong performance from our value orientated manager Antipodes. As many of our clients are aware, we select managers who can blend well in times of uncertainty. This was certainly the case with Antipodes Global Fund - Long who outperformed the index by close to 4% over the month on the back of strong performance from a number of energy and financial names. Offsetting these gains was the performance of our growth and quality style managed funds including the Fairlight Global Small and Mid Cap Fund and the Hyperion Global Growth Companies Fund. Both have had exceptionally strong returns over the past 2 years, but ultimately a sharp market reversal has had an impact on some of their underlying positions. One of the key drivers for Hyperion was the sell-off in Tesla and Block (which recently acquired Afterpay). In Australian equities, a similar story was seen with the Atrium Equity Opportunities Fund. This fund has also had a very strong period of performance, however, a rotation in the market in favour of energy and materials companies was only partially buffered against the downturn seen in James Hardie and Macquarie Group.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-7.pdfDecember, 2021
The Fund finished the 2021 calendar year strongly, returning in excess of its cash plus objective while remaining well within its risk limits. Since inception, we have achieved on both our risk and return objectives while delivering investors a much smoother return profile compared to peers.
Our preservers allocation was a minor detractor to performance over the quarter as government bond yields rose and credit markets were increasingly volatile. While the RBA maintained its record low interest rate policy, it did however abandon its yield control policy which caused short term interest rates to rise.
The CQS Multi Asset Credit Fund was one of the standout performers due to the outperformance of high yield and loan markets over the quarter, along with the MCP Wholesale Investments Trust (managed by Metrics Credit Partners) which was relatively stable during the quarter. On the other side of the ledger, Kapstream Absolute Return Income Fund was marginally lower, notwithstanding that it had reduced risk noticeably leading into the year end, while Smarter Money Higher Income Fund was adversely impacted by its exposure to semi-government bonds which suffered from fears of deteriorating Australian state finances due to the pandemic. Our diversifiers were a positive contributor over the quarter. The key drivers of positive returns over the quarter included the Man Alternative Style Risk Premia Access Fund, which returned over 5% for the quarter and had its best calendar year since inception. The key underlying contributors included the equity sleeve (namely value and quality factor signals), while the low equity beta strategy also delivered as markets pivoted away from high beta growth stocks over the quarter. The P/E Global FX Alpha Fund was also a positive contributor over the quarter due to its positioning in the strongly performing US dollar, while the Crown Atrium Segregated Portfolio (which holds one fund managed by Zebedee Capital Partners) was positive despite their low net equity exposure.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-5.pdfNovember, 2021
The Fund delivered a 3.66% return during November, underperforming the S&P/ASX 300 AREIT Index by - 0.3%. The Fund continues to significantly outperform its benchmark over the past twelve months with strong relative contribution from fund managers Home Consortium and Charter Hall Group, as well as selective residential exposures such as Lifestyle Communities, Ingenia Communities Group and Stockland. During November, Charter Hall Group was the strongest contributor to relative performance following its upgraded FY22 earnings guidance to +36% (previously +23%). Relative positioning in Rural Funds Group and Dexus also positively contributed to performance. Monthly detractors to performance included our underweight to Goodman Group, which delivered a solid quarterly update underpinned by momentum in its development business, whilst our overweight position in Vicinity Centres underperformed the market due to fears surrounding the new omicron COVID variant and the potential impact to shopping centre visitation.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-8.pdfOctober, 2021
The Fund has now reached its 10-year anniversary, and we are pleased to deliver on our objectives of strong long-term performance with lower volatility compared to peers. In the month of October, global equities were the key driver of returns, with the Hyperion Global Growth Companies Fund the standout performer due to its exposure to US technology stocks. In a month which saw Australian bonds suffer the sharpest falls in 30 years, our diversifying liquid alternatives strategies provided a positive contribution in aggregate, highlighting the importance of seeking out true portfolio diversification.
The Atrium Evolution Series – Diversified Fund AEF 5 successfully navigated falls in domestic shares and local bonds and delivered positive returns in the traditionally volatile month of October. This month also corresponded with the 10-year anniversary of the Atrium Evolution Series – Diversified Fund and pleasingly, during a month of volatile returns in traditional assets, we were able to highlight the advantages of a risk targeted approach for clients. Global shares were the key driver of returns, notwithstanding the headwinds of the stronger Australian dollar. The Hyperion Global Growth Companies Fund continued to perform well on the back of its US technology exposure along with the phenomenal rise of Tesla over the month. Our smaller capitalisation stock picker, Fairlight Global Small and Mid Cap Fund, outperformed its benchmark with solid performances from a number of key positions including Aspen Technologies, a global leader in industrial optimisation software which was the subject of a takeover offer during the month.
Our Australian shares allocation was flat over the month, modestly outperforming the broader market after a very strong prior quarter, with small and mid-cap stocks outperforming their larger counterparts. Our exposure within the preservers part of the portfolio was slightly lower over the month, falling 0.2%. However, it is worth mentioning that this was in sharp contrast to the composite Australian bond market which suffered one of its sharpest falls in 30 years (-3.6%) as the RBA pivoted away from its view that the cash rate would be on hold until 2024. The key standout performer was the Smarter Money Higher Income Fund which benefited from its large position in Australian semi-government bonds which performed relatively well, while Daintree Core Income Trust and Ardea Real Outcome Fund declined on the back of the circa 1% rise in the three-year bond yield.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-4.pdfSeptember, 2021
The Fund returned another quarter of positive performance and continues to consolidate the strong returns seen over the past 12 months. Notwithstanding equity markets stepping back from their recent highs, returns for investors have been exceptionally strong over this period – exceeding the cash plus objectives by a considerable margin. The key driver of performance continues to be the allocation to equity managers both here in Australia and via our global partners.
Within our preservers allocation, we continue to display low levels of volatility across the portfolio in an environment where both interest rate and credit markets have seen significant swings over recent months. Importantly, we have positioned the allocation to be shielded from much of this volatility as we have oriented away from interest rate markets, instead continuing to focus on strategies in high quality credit for the majority of this part of the portfolio.
The key contributors for the quarter included Kapstream Absolute Return Income Fund, JP Morgan Global Strategic Bond Fund and the CQS Credit Multi Asset Fund which were able to deliver positive returns in a volatile market environment, while the key laggard was the Smarter Money Fund which was negative on the back of losses in the semi-government bond market. The spread between semi and Commonwealth Government bonds moved wider over the quarter on the back of concerns around the finances of New South Wales in particular.
During the quarter we saw rising equity bond correlations which validates our view that relying on traditional measures will not provide an appropriate ballast for portfolios so we prefer to orientate to low interest rate sensitivity assets.
Amongst our diversifier allocations performance was mixed over the quarter. The P/E Global FX Alpha Fund was the key outperformer, as the surge in the US dollar drove returns for the strategy. Fixed income arbitrageur Episteme Capital (via the Crown Diversified Trend Access Fund) provided strong positive returns over the quarter as it was able to capture the volatility of bond yields. During the quarter however it was pleasing to see positive performance from our Risk Premia managers Man and Two Sigma, which were able to profit from volatile markets, Man has continued to benefit from the re-structuring of its equity based risk premia strategies, while Two Sigma has been profiting in particular from its momentum based macro strategies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-3.pdfMay, 2021
US equities returned 0.7% for May and market volatility continued to recede. Information Technology, the largest sector in the S&P 500 Index, struggled generating a decline of -0.9% (paced by a -5.1% fall in Apple’s share price). Sectors linked to the infrastructure rebuild in the US performed very strongly, led by Steel (+24.7%) and Copper (+13.3%). Elsewhere, Energy rose sharply (+5.8%) and Financials continue their strong recovery (+66.2% on a 12-month basis). Further weakness in Tesla (-11.9%) weighed on the Consumer Discretionary sector (-3.8%). European markets performed slightly stronger, rising 2.6%, with the French market surprising on the upside (+4.0%), and Germany’s DAX lagging somewhat (+1.9%). Emerging markets were also mixed, however China was a standout given its size, with a +5.2% month; this is recouping prior recent underperformance, as on a 3 month view the index is broadly flat as the Peoples’ Bank of China shows signs of tightening liquidity. Mexico (+6.7%), Russia (+7.3%) and Brazil (+6.2%) all performed strongly despite their respective central banks also being in a policy tightening mode.
The Australian equity market generated a 2.3% return in May to be up 10.4% since the start of 2021. The Bank sector remained very strong, rising 7.3% for the month (up 28.2% over 6 months), seeing Commonwealth Bank trade above $100 for the first time. Elsewhere the performance was mixed as Insurance and Healthcare rose, offsetting a significant pullback in Information Technology (-9.9%) and Utilities (-6.6%, led by AGL -9.1% as it was expected to need to raise further equity capital in the near term). Small company stocks lagged the broader market over the month.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-2.pdfApril, 2021
Markets were closely focussed on inflation during April, attempting to look through significant price increases in a number of areas, and to gauge what this means for central banks going forward. Copper, lumber, iron ore, and a range of other commodities surged as the global economy showed signs of improvement, despite lingering COVID concerns, most notably in India. Equities continued to move to record highs in a number of regions, bond yields consolidated, credit markets remained firm and the Australian dollar rose.
The US equity market returned 5.3% during the month, and market volatility continued to decline. Strong performance was seen in Telecommunications (+7.9%) and Consumer Discretionary (+7.1%). Financials also performed strongly (+6.6%), as the market took a positive view on the Q1 earnings released during April. Broadcast stocks were weak, weighed on by Discovery (down around 13%), one of the stocks previously held by the failed Archegos Capital, potentially linked to unwinding of the remaining Credit Suisse exposure. The Materials sector performed in line with the index (+5.3%), although the Copper sector sharply outperformed within this, generating 14.8%. Elsewhere, Emerging Markets generally underperformed (+1.6% in local currency terms) as a number of central banks have commenced rate hikes, as inflationary pressures mount partly reflecting domestic currency weakness. European markets also lagged the US, generating +2.1% (MSCI Index), and the German Dax (+0.8%) was a key drag on the region
The Fund delivered strong performance over the month of April with all asset classes contributing positively to returns. Global equities in particular contributed strongly to the result. The Fairlight Global Small and Mid Cap Fund did well as the smaller end of the market continues to outperform larger stocks, and the manager’s active quality approach also added value over their benchmark. Our liquid alternatives allocation has continued its solid start to 2021, providing genuine diversification as bond market volatility has continued to impact the effectiveness of bonds as a portfolio diversifier. The majority of alternatives strategies delivered positive performance led by equity market neutral manager Regal Funds Management and our alternative risk premia strategies, while our rates and credit allocations also contributed to returns.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Atrium-Evo-5-1.pdfDecember, 2021
The Atrium Evolution Series - Diversified Fund AEF 5 Units ended a tumultuous 2020 with another quarter of strong performance, outperforming its cash plus objective over the last 12 months and over the longer term. While markets have been volatile over the last year, we have been proud to be able to deliver investors a much smoother return profile through both active management and dynamic asset allocation, while continuing to meet our risk and return objectives since inception. Equities were the main driver of performance for the quarter, with Australian shares in particular the standout.
Liquid alternatives were also a major contributor to performance alongside both private markets and rates & credit. However, the strongly rising Australian dollar did dampen returns over the quarter, as the local currency rose sharply against the US dollar. Preservers Our preserver allocations generated positive returns in the quarter. The Atrium Enhanced Fixed Income Fund (AEFI) returned 1.1%, driven by a continued strong rebound in global credit markets. The RBA lowered the cash rate target to 0.1% in November providing added impetus for domestic credit markets. During the quarter, key contributors to performance included Kapstream Absolute Return Income Fund (Kapstream), Daintree Core Income Fund, and JP Morgan Global Strategic Bond Fund which all returned over 1% for the quarter. The CQS Credit Multi Asset Fund continued to perform well returning 5.3% over the quarter, as it was able to take advantage of buoyant non-investment grade credit markets.
AEFI reduced its exposure to Kapstream, increased exposure to the Ardea Real Outcome Fund and made a new allocation to the Smarter Money Higher Income Fund (managed by Coolabah Capital Investments), which can allocate to bank hybrids along with other bank credit securities to take advantage of more opportunities across the credit risk spectrum.
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ticker: COL0029AU
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fund_features:
The portfolio aims to seek to maximise the return on the Portfolio while remaining within a pre-determined risk or volatility limit. The Portfolios are diversified across cash related investments, equity related investments and non-equity related investments. The Portfolios may be invested directly and through underlying funds managed by specialist managers.
structure: Managed Fund