he Rushton Ethical Global Market Neutral Fund (“Fund”) is a highly diversified, market neutral, socially responsible Fund open to wholesale clients investing a minimum of $250,000. This Fund allows investors to invest in a conscientious manner, without taking on share market risk – or sacrificing returns.
Rushton focuses on companies that adhere to the primary principles set out within the United Nations Principles for Responsible Investment (UN PRI). Considering this information as part of the investment process allows the Fund to not only seek to earn a good financial return for its investors, but to also focus its investments in companies that strive to minimise any harm that may be done to society as a result of their business model, and actively seek to have a positive impact on society through their activities. In broad terms, this involves an assessment of hundreds of different data items, which are drawn from a variety of public sources, with the goal of assessing whether a company is a good corporate citizen. For example, this data can be used to assess a company’s workplace health and safety record, reported incidences of fraud, labour issues, and product safety considerations.
Of the three ESG criteria (i.e. environmental, social, and governance), within the Environmental category, information considered includes; attention to carbon emissions, toxic waste emissions, use of Renewable Energy, and Clean Technology. In the Social category, assessment involves; reviewing information related to supply chain labour standards, controversial sourcing, and human capital development. Governance focuses on; an assessment of matters relating to business ethics, fairness of business competitiveness practices, responsible behaviour of employees and officers, and transparency.
Overall, considering ESG criteria helps the Fund to use public financial markets to support companies that are having a positive impact on society and the world in general, through conscious implementation of responsible and ethical policies and business practices. Rushton believe in the inherent compatibility of the goals of maximising risk-adjusted returns, and investing in a manner that is responsible and conscious of sustainability, as the long-term viability of the global economy is intimately linked with the preservation of our planet, and the prosperity and wellbeing of humanity.
Unless the Manager determines otherwise, each applicant must be a “wholesale client” as defined under the Corporations Act 2001 (Cth) (Corporations Act). If you apply for less than $500,000 of Units in the Fund, you will be required to provide evidence that you are a wholesale client. This may include providing a current certificate by a qualified accountant confirming that the applicant is a wholesale client.
Some of the key benefits of investing in the Rushton Ethical Global Market Neutral Fund are:
The fund aims to consistently deliver positive returns, through up, down and flat market conditions, with little or no net exposure to global equity markets, and an overarching focus on capital preservation.
Minimal share market risk, due to our market neutral approach
Being market neutral, we construct a portfolio containing two sub-portfolios, i.e. a long and a short sub-portfolio, and hold approximately equal dollar amounts of both long and short positions, which largely removes share market risk. Rather than generate a profit from the upward movement of the share market, as in a normal share investment, in our market neutral investment, a profit is made when our highly ranked (long) portfolio outperforms the lowly ranked (short) portfolio – regardless of whether the share market moves up or down. This allows our disciplined investment strategy to operate without the concerns of a share market correction, or crash. Full details of how our market neutral strategy works are provided in the Information Memorandum. Click here for a copy.
The strategy has the ability to perform equally well in both good and bad times
The investment strategy has the ability to perform equally well in both good and bad times, meaning that performance of the Fund is not based on favourable economic conditions, or rising asset prices. This is different to most other investments, including shares and property, which largely rely on continually rising asset prices, and consequently, these investments usually perform poorly when asset prices are stagnant, or falling. As most investors have few investments in their portfolio that have the ability to perform well in bad times, they tend to suffer sizeable losses when economic conditions deteriorate, and could therefore benefit by including an investment that has the ability to perform well under these adverse conditions. How this works is explained in detail in the Information Memorandum. Click here for a copy.
We only invest in the largest and most heavily traded Instruments, providing a high level of liquidity. Monthly withdrawals are available. For full details, please refer to the Information Memorandum. Click here for a copy.
Highly diversified investment
It is often said that ‘diversification is the only free lunch in finance’ and effective diversification is central to our approach to investment management. Firstly, our strategy is based on multiple investment themes, that each generate profits at different times, and under a range of market conditions. These various themes provide for strong diversification at the strategy level. Further, the strategy is spread over 600+ Instruments in multiple countries across the Asia-Pacific region and Europe. This high level of diversification assists in smoothing overall performance, as it is our objective to maintain stability and consistency through all economic conditions. A full explanation is provided in the Information Memorandum. Click here for a copy.
Minimal currency exposure
As the security for all international positions is primarily held in Australian dollars, and there are approximately equal amounts of both long and short exposure in each currency (i.e. the strategy is currency neutral, as well as market neutral), the effect of currency movements is minimal. The proportion of overall risk that can be attributed to currency exposure is so small that it does not negatively impact the strategy in a significant manner. The end result of being currency neutral is that investors achieve the benefits of international diversification across many countries, without the constant worry of currency movements. For a full explanation, refer to the Information Memorandum. Click here for a copy.
Low correlation to the returns from shares and other traditional asset classes
The most effectively managed investment portfolios combine acceptable investments that are lowly correlated to each other, which provides true diversification benefits, and adds considerable value to the overall investment portfolio. It is even more important to ensure that these low correlations are sustainable over time – even under the worst possible economic conditions, i.e. when asset prices are falling, and the diversification benefits are needed the most. By combining lowly correlated investments that each produce an acceptable risk-adjusted return over time, it is possible to enhance investment performance without increasing overall risk. See the Information Memorandum for further details. Click here for a copy.
Carefully managed volatility
With a targeted gross exposure of 200% (100% long and 100% short), and minimal share market exposure due to our market neutral approach, annualised standard deviation is targeted at below 6%. We aim to maintain volatility at these moderate levels, and to produce a good return for the level of volatility accepted. In other words, we aim to generate a high risk-adjusted return. Request the Information Memorandum for full details. Click here for a copy.
Extensive risk management guidelines
We believe that if an investment strategy is grounded in sound academic theory, combined with a practical knowledge of market dynamics, it should continue to provide strong returns over the medium to long term, provided the various risks inherent in the process are managed well.
Our risk management procedures ensure that only those risks which we consider to be conducive to positive long-term performance are accepted, and those that don’t, are either eliminated, if at all possible, or if not, are carefully controlled. Risk management is not simply about addressing common risks either, as risks that occur rarely (tail risks), are also carefully identified and managed to the fullest extent possible.
Note: There are a number of risks associated with investing in the Fund, including Manager risk. The success of the Fund is dependent on the ability of the Manager to identify investment opportunities that achieve the Fund’s investment objective. We recommend you review all the risks discussed in the Information Memorandum, in consultation with your professional adviser.