The Manager has a wide discretion over the investments that may be held by the Master Fund. The pursuit of a diverse range of investments means that the Master Fund’s returns are not necessarily dependent on the stock market’s direction, or dependent on any specific assumption or key market parameter. The Master Fund does not seek to replicate the standard industry benchmarks.
In selecting investments for the Master Fund the Manager follows a rigorous investment selection process which includes detailed qualitative and fundamental research.
The Master Fund focuses on the universe of Australian exchange listed equities (including Australian shares listed overseas, and equities that are about to be listed) and equity derivatives, including options and convertible securities.
The Manager research’s various criteria and reasons to invest in particular situations. These criteria may pertain to fundamental and quantitative analysis, company event situations such as takeovers and mergers, demergers and restructuring, liquidity events, recapitalisations, multiple share classes, option availability and pricing.
The catalyst for the Master Fund to enter a trade is identifying mispriced risk. This is assessed in the context of a broad portfolio of listed equities, options, and other instruments. The Investment Manager continually evaluates market indicators or risk, and seeks opportunities across a range of strategies – whilst having regard to the expected time horizon of each investment.
Once an investment decision is made, the implementation of the trade is conducted in parallel with an active focus on risk management.
The Master Fund uses derivatives for risk management as well as to create new positions. The Master Fund may opportunistically short sell securities that are considered to be overpriced in the anticipation of purchasing them later at lower prices for a profit, or to reduce risk on the overall portfolio.
Leverage may be used to enhance returns by allowing the Master Fund to participate in short term opportunities which provide attractive risk-return propositions.
Accordingly, the Master Fund invests in opportunities that it considers to offer attractive risk return characteristics with a focus on potential catalysts that seeks to generate a profitable return regardless of the market direction.