George Colman

The ARCO Absolute Return Fund has been added to the BT Panorama platform, providing more advisers and their clients with access to the investment manager’s 10 year track record of managing the absolute return strategy.

The aim of the Absolute Return Fund is to consistently compound investor returns over time through a fundamental approach to stock selection, combined with an overarching focus on preserving capital through the market cycle.

George Colman, ARCO co-founder and portfolio manager, welcomed the addition of the fund to BT Panorama’s high-calibre platform, saying it would further open-up adviser and investor access to a tried and tested approach to protecting and growing wealth at a time when market volatility seems likely to rise.

“We are pleased that a growing number of advisers will now be able to access the fund and provide their clients with a well-worn approach to preserving and growing their capital over time,” said Mr Colman.

“We believe proven absolute return strategies should be an enduring part of any portfolio. Ultimately, the best way to grow wealth is not to lose it and since ARCO’s inception in 2008, the strategy has delivered positive performance just shy of 80 per cent of months*.”

“The ARCO absolute return strategy was launched just after the Lehman Brothers bankruptcy triggered the Global Financial Crisis in 2008, with the purpose of delivering to investors positive, absolute returns, not returns relative to a market benchmark which can be more volatile and negative at times,” said Mr Colman.

The Fund applies the 130 years of aggregate equities experience and skill of ARCO’s highly successful investment team including co-founder and portfolio manager Peter Whiting and senior investment analysts Stephen Nicholls and David Rosenbloom.

This year the Fund also received a ‘Recommended’ rating from Zenith**, with the research house noting that ARCO’s highly experienced investment team are well placed to deliver upon the Fund’s investment objectives.

The post ARCO Absolute Return Fund added to BT Panorama platform appeared first on AdviserVoice.

Bruce Loveday

Absolute return investing is a tried and tested investment approach that can help investors accumulate wealth whilst also avoiding some of the major downside risks in the market, although it is unfortunately not well understood by many investors, according to ARCO Investment Management.

Speaking at a lunch event in Sydney today, ARCO Chairman Bruce Loveday said far from being a new philosophy, absolute return investing has been used successfully by sophisticated and institutional investors for many years and is now growing in popularity among advisers and self-directed investors.

“ARCO’s track record over the past 10 years as an absolute return specialist illustrates the degree to which this type of strategy can help investors manage market risks in their portfolio and be a great complement to more traditional equity funds,” Mr Loveday said.

“The ARCO Absolute Return Trust has generated over 8% pa net of fees for investors since September 2008, during which time the largest drawdown experienced was 4.7%, compared to over 30% for the broader Australian equity market. Adding this type of downside protection can help investors and their advisers build better portfolio outcomes in terms of diversification and consistency of returns.”

ARCO co-founder and portfolio manager George Colman added that the ability of the absolute return manager to not be constrained by market benchmarks and to more actively manage risk settings for investors as markets change means it is better positioned to manage downside risks for clients.

“For example, some valuations in the financial sector in particular are stretched at the moment in our view, and with house prices under pressure plus the Royal Commission’s scrutiny on lending practices likely to put more pressure on credit growth, we are positioning our absolute return portfolio to take advantage of pricing retracement in some financial stocks,” he said.

“We’re also bearish on sectors that are overly dependent on local consumer spending and credit and bullish on stocks that have a clear and compelling ‘self-help’ story that will reward shareholders.”

In terms of its approach to stock selection, Mr Colman said ARCO focused on the relationship between a stock’s price and its ‘fair value range’. Companies that are priced at either a significant discount or premium to their fair value range are interesting to ARCO and provide an important prompt for the investment team to take a deeper look at the stock’s risk and return potential before deciding whether or not to invest.

“Given the risks that we see building in the local economy, we also have a current preference for companies with some exposure to overseas markets that are at a different stage of the economic cycle,” he said.

The post Absolute return investing helps investors manage rising market risks appeared first on AdviserVoice.

ARCO co-founder and portfolio manager George Colman said having the Absolute Return Fund included on the platforms’ investment menus would provide adviser clients with more opportunities to access ARCO’s well-established strategy.

The strategy is part of an increasingly popular investment style that focuses on both compounding investor returns over time and on reducing their drawdown risk through the market cycle.
“Absolute return investing is a simply sensible, intuitive approach to protecting and growing wealth and is an enduring part of a growing number of investment portfolios”, added George Colman.

“We are pleased that a growing number of advisers will now be able to leverage our investment team’s real-world experience in protecting and growing wealth during both normal and abnormal market conditions.”

ARCO has been managing its absolute return strategy since September 2008 for high net worth family, charity and institutional clients. During this time it has delivered a return of over 8% p.a. (after fees) with relatively low volatilty and positive performance in around 80% of the months that the strategy has been operating.

The Absolute Return Fund leverages the experience and skill of ARCO’s highly successful investment team, with more than 120 years cumulative experience in equity research and portfolio management.

The fund recently received a ‘Recommended’ rating from Zenith.

The post ARCO Absolute Return Fund added to Netwealth and HUB24 platforms appeared first on AdviserVoice.

Mr. Rosenbloom joins Co-Portfolio Managers George Colman and Peter Whiting, who founded ARCO in 2008, and Senior Investment Analyst Steve Nicholls who has been with the firm since 2010.

Mr. Rosenbloom arrives at ARCO after five years as Portfolio Manager for Janus Henderson’s Australian equity absolute return strategy.

“David’s career spans 30 years in equity research and portfolio management, so we’re confident that his knowledge and experience will quickly have a positive impact as we roll out our absolute return strategy into the retail market next month,” Mr. Colman said.

“In addition to his research and portfolio management experience, David has welcome skills in developing additional product solutions for investors and advisers with an absolute return appetite.”

Prior to his role at Janus Henderson, Mr. Rosenbloom spent 11 years as portfolio manager for Wallara Asset Management’s Australian equity strategy, where he jointly oversaw growth in the firm’s funds under management from $20 million to over $4 billion.

“I have known the ARCO investment team for many years now and have great respect for their views on stocks and markets. Joining ARCO is a natural fit for my market beliefs, especially at a time when the business is in a good growth phase,” Mr. Rosenbloom said.

The appointment comes as ARCO looks to launch its proven and successful absolute return strategy into the retail market next month.

The strategy aims to consistently compound investor returns over time through a fundamental approach to stock selection, combined with an overarching focus on preserving their capital through the market cycle.

This investment strategy is becoming increasingly popular amongst retail investors and their advisers after being a mainstay in the institutional space for many years, creating the perfect opportunity for ARCO to enter the market, said the group’s chairman Bruce Loveday.

“Absolute return strategies that have a credible track record of protecting investor capital through volatile markets, whilst steadily compounding returns over time, are receiving increasing interest from advisers and their clients and have an enduring role to play in portfolio construction,”Mr. Loveday said.

“David clearly shares this view and has the relevant experience in not only financial markets but also with advisers, asset consultants and investors, to support ARCO on our growth path,” he said.

The post ARCO bolsters investment team with senior hire to support growth appeared first on AdviserVoice.

Mr Loveday is the former Chairman of Bennelong Funds Management Limited and Praemium Limited, and currently serves as Chairman of Burnham Capital, part of the private family office, Burnham Group.

The move by ARCO follows overtures by several private wealth and family office investors and their advisers, attracted to the strategy’s capital preservation and compounding return track record, but who sought daily liquidity and pricing for the strategy.

ARCO’s flagship absolute return strategy has been a strong performer. Since inception in September 2008, the strategy has delivered a net annual return of 8.3% per annum. It has also generated positive returns in 80% of months since its inception, compared with 53% for the ASX200.

ARCO believes its Absolute Return Fund will appeal in current market conditions. Financial markets currently face several escalating risks, and investors are actively reshaping their portfolios to better prepare against downside risk and to protect their capital.

“Ultra-low interest rates continue to underpin relatively expensive equity valuations, but this trade is now very long in the tooth. Offshore central banks seem keen to lift rates and tighten liquidity, which may well increase equity market volatility,” said George Colman, Co-Portfolio Manager and co-founder of ARCO.

“In Australia, there seems to be less immediate upward pressure on short rates, but we remain wary about the outlook for housing, and its broader implications for the economy and our equity market.

“Given these issues, in addition to a number of geo-political risks which have been largely ignored by equity markets to date, we shouldn’t be surprised that many sophisticated investors are increasing their portfolio allocation to alternative strategies such as absolute return funds that have proven effective in preserving capital in all market conditions,” said Mr Colman.

ARCO Absolute Return Fund

“The key objectives of the ARCO Absolute Return Fund are to deliver steady, compounding investor returns over time through stock alpha generation, with an overarching focus on capital preservation and with lower volatility compared to the broader equity market,” said ARCO Co-Portfolio Manager and co-founder Peter Whiting.

“We have a fundamental research approach to selecting stocks, constructing portfolios of stocks we believe are mispriced and don’t reflect their underlying value. We hedge the ‘long’ portfolio against market drops by selling short securities that we believe are priced well above their underlying values,” he said.

“The fund is designed to shield investors from downside equity risk when equity markets are flat to falling while building wealth over time.”

The strategy typically has a diversified portfolio of between 40 and 60 stocks (including both long and short positions).

The post ARCO responds to market demand with a new daily-liquid absolute return offer appeared first on AdviserVoice.