Rushton Capital Management - Trying to check them out

Hi,

Hope this is the right place to post this thread. Got a brochure today on Rushton Capital Management - http://rushtoncapital.com.au/

Market neutral style. seems too good to be true. Over 20% annualised return over the last 10 years.

Has any any experience or information on these guys? They are based in Brisbane but require over $500 to invest.

Cheers,

Paul.

I had a quick look. Their market neutral strategy is about going long a diversified (50-60) basket of shares which they think will outperform, and shorting a equally diversified basket of shares which they think will underperform, over a 1-3 month timeframe.

Market neutral strategies are nothing new and can generate very good risk-adjusted returns in the right hands. There aren't a lot of evidence to conclude whether they are the right hands or not.

By way of example, in the quarter ended 30 Jun 2014, the best performing 50 stocks in the ASX200 returned 16.1% on average, while the worst 50 stocks returned -16%. So if you were to nail every single one of them, you'd earn 32%. The quarter before that, the percentages were +21/-14.5%.

Given that they are only talking about a 15-20% per annum target, and assuming they "rebalance" every 3 months, they only need to capture ~4-5% of the 30%+ disparity available. So while it may not be easy, it'd certainly be in the realm of possibility.

The questions I'd be asking them include:

1. Do they have audited broker statements for past performance?
2. Which institution / broker will be used?
3. How many clients / total FUM do they have?
4. How quickly can one access his own money (i.e. make withdrawal)?
5. What are the management fees?
6. Tax implications (e.g. you may have incurred capital gains/income even when you don't make any withdrawals)?
7. Will they email you actual statements over the next 3-month before you committ? That way you can essentially walk-forward test their strategy.

Interesting hedging strategy they have. I checked how many stocks in the ASX200 are down trending.

For last 250 trading days = 71 out of 200
For last 100 trading days = 74 out of 200
For last 20 trading days = 49 out of 200

They should be paying dividends on the short sales too.

Yes good questions skc. My answers below your questions.
1. Do they have audited broker statements for past performance?
no
2. Which institution / broker will be used?
They use saxo capital markets.
3. How many clients / total FUM do they have?
80 mil under management.$500k min investment so 160 clients- no proof
4. How quickly can one access his own money (i.e. make withdrawal)?
They trade on your behalf so shares and cash are held in your name. he say it's very liquid so you can withdraw whenever you like.
5. What are the management fees?
2% management fee and 20% on new profits. I have no problem paying for skill but by the time you find out your $10k down.
6. Tax implications (e.g. you may have incurred capital gains/income even when you don't make any withdrawals)?
Not sure how to answer that. I would hope there would be gains.
7. Will they email you actual statements over the next 3-month before you commit? That way you can essentially walk-forward test their strategy.
I didn't ask that exact question but they would not even give me a client/testimonial or any audit reports.


Frustrating because they could not give me any proof that their returns were real. I got "we couldn't publish these figures if they wern't true because asic would come down on us" But as the funds are held in the clients names how can asic know if the figures are true? They admitted this was true.

I like them because they are local in brisbane and involved in the local community and I like the sound of the strategy. But no proof at all?

Looks like just about every SMSF in Australia was mailed that brochure.

The long/short strategy is effective but difficult for the retail investor to implement so doing it via a fund is attractive.

However the lack of transparency in a non-listed fund is a worry and so I would recommend a long/short ETF such as Australian Leaders Fund as a better alternative.

elbee said:

Looks like just about every SMSF in Australia was mailed that brochure.

The long/short strategy is effective but difficult for the retail investor to implement so doing it via a fund is attractive.

However the lack of transparency in a non-listed fund is a worry and so I would recommend a long/short ETF such as Australian Leaders Fund as a better alternative.

Click to expand...

I can't see why anybody would put the minimum $500,000 with this lot when there are many questions unanswered. Big risk when there are good performing funds that we know for a fact are legitimate and trustworthy. Not saying these aren't as I simply don't know...but big gamble i.m.o.

pacjewel said:

Yes good questions skc. My answers below your questions.
1. Do they have audited broker statements for past performance?
no
2. Which institution / broker will be used?
They use saxo capital markets.
3. How many clients / total FUM do they have?
80 mil under management.$500k min investment so 160 clients- no proof
4. How quickly can one access his own money (i.e. make withdrawal)?
They trade on your behalf so shares and cash are held in your name. he say it's very liquid so you can withdraw whenever you like.
5. What are the management fees?
2% management fee and 20% on new profits. I have no problem paying for skill but by the time you find out your $10k down.
6. Tax implications (e.g. you may have incurred capital gains/income even when you don't make any withdrawals)?
Not sure how to answer that. I would hope there would be gains.
7. Will they email you actual statements over the next 3-month before you commit? That way you can essentially walk-forward test their strategy.
I didn't ask that exact question but they would not even give me a client/testimonial or any audit reports.


Frustrating because they could not give me any proof that their returns were real. I got "we couldn't publish these figures if they wern't true because asic would come down on us" But as the funds are held in the clients names how can asic know if the figures are true? They admitted this was true.

I like them because they are local in brisbane and involved in the local community and I like the sound of the strategy. But no proof at all?

Click to expand...

Guys I can't vouch for them either way, but if you are looking for a Brisbane-based manager for your SMSF, you should check out KPI Capital Markets... multi-strategy... 5y performance 22%pa nett so similar track record to Rushton.

Still a wholesale fund so published minimum is 100k, but generally even wholesale guys can take a certain amount of retail $$ per year under their AFSL. I agree with porper in that 500k is a pretty big gamble sight unseen. I know of these guys because my old man just invested some super with them.. not sure what FUM they have though... they seemed pretty straight up for what it's worth. Anyway, just my 2c

Hi,

Has anybody had any experience with the Rushton Capital Market Neutral IMAs yet. Or found any plausible third party information or research about them?

There are a few that I have looked at and spoken to including:

Totus Alpha - rate Ben McGarry very highly and has done well over the past 12 months (I am invested)
Ellerston Market Neutral Fund (like management style and their funds generally perform pretty consistently (I am invested in one of their other funds)
AEG - ASX - not sure yet. Debut on the market in Dec 2015 but managed by Richard Fish of Bennelong hand strategy supposed to be identical to the Bennelong fund. Concerned that the price jumped 10% in a month since opening so may have swallowed up the first years performance but will give it a punt on any weakness I think
Rushton Financial - have had numerous discussions with Glenn Rushton and I like the sound of what I see and hear. About to invest.

Whilst all the above would be considered to be "high risk' by Fund Monitors and similar (though not all covered) - I think a decent spread of a few funds should help to mitigate that risk and in the event of another GFC I feel better positioned than I did the last time.

Probably not terribly helpful in terms of Rushton in isolation but hopefully puts it into context of what one investor (i.e. me) is doing at least.

I have given them a go following numerous telephone discussions with Glenn and Lee. I like the model because they invest in the fund themselves . The model is not new and they seem to be as good as anyone else - better than some. I avoid the large ETF's and listed managers (AMP to name one that has disappointed). Its impossible to speak to a real person that knows whats going on and the names on the brand are too elevated and busy to chat to small investors.

I certainly agree with one of the earlier comments, why try and do it yourself when there are people that do it for a living and presumably have access to much better information that I do.

So long as one applies reasonable governance principles in terms of no more than 5% of ones investable funds and not gearing up to do so, I think they look good, particular for the SMSF's. 25-30% in hedge funds is not a bad way to go and I have found that when the market is down their outperformance more than makes up for the weak performance elsewhere.

If you like Rushton also look at Totus Alpha Fund run by Ben McGarry - has done very well over the past 12 months (excl March that is). Ben takes calls and returns messages, unlike many others. I also like the Ellerston Market Neutral Fund which publishes prices daily and are also very responsive.

pacjewel said:

Hi,

Hope this is the right place to post this thread. Got a brochure today on Rushton Capital Management - http://rushtoncapital.com.au/

Market neutral style. seems too good to be true. Over 20% annualised return over the last 10 years.

Has any any experience or information on these guys? They are based in Brisbane but require over $500 to invest.

Cheers,

Paul.

Click to expand...

Paul, I will make short and clear: I invested with Rushton in 2015 and up now I have lost 12%. Their technique is a well known one: after 3 months I was 5% up and then started to loose, very little at the time. Lot of gas bagging on their part, but reality is reality. I am going to take what is left off.