The Fund returned 0.80% over the month of July, delivered 2.53% for the previous three months and 9.48% over the past 12 months. The Net Asset Value (NAV) of the Fund, as at 31 July 2014, was $47.2 m1 and the redemption price was 1.3477772.

The key objectives of the Fund are to deliver stable and consistent returns and not share the volatility of the equity markets. Over the past 12 months ending July 2014, the Fund has returned slightly less than the Australian ASX 200 index. However, the difference in the annualised volatility (measured by the annualised standard deviation of the monthly returns) of the Fund versus the ASX 200 was significant. The Fund experienced volatility of 0.70% while the ASX 200 had more than ten times the volatility at 8.4%.

Risk assets have been the beneficiary of low volatility in recent times (compare the volatility of the ASX 200 over the last 12 months with the average volatility of the ASX 200 index over the past 10 years of 13%). However, this low vol environment will end (possibly when the Fed starts to raise rates) and we think when it does, the difference between the volatility of the Fund versus the ASX 200 will be even more exaggerated than it has been over the past 12 months.

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