Description of the Funds managed by QMG
TOSCA (AF) FUND
The Tosca (AF) Fund is an Australian unregistered managed investment scheme established on 22 December 2020 and is intended primarily for investment by Australian tax resident Investors. The Base Currency of the Fund is Australian Dollars.
The Fund is a feeder fund investing all of its investable assets in, and conducting all of its investment operations through, the Tosca Master Fund, a Cayman Islands exempted company incorporated with limited liability in the Cayman Islands. The investment objective of the Fund is to achieve a superior total return through capital appreciation with an annualised target return of more than 15%. Toscafund Asset Management LLP, an English limited liability partnership, acts as Investment Manager to the Fund and the Master Fund. The Investment Manager will seek to achieve the target return by following a strategy of investing in companies globally. Such companies will primarily be involved in financial services and associated business sectors. The Investment Manager will pursue “long” and “short” investment strategies, normally with a net market exposure for the Fund ranging between 50% net long and 50% net short and with gross market exposure for the Fund being generally restricted to a maximum of 175% of the Master Fund’s net assets.
The Investment Manager envisages competitive advantages in its approach which include the following:
- specialised area of coverage and experience;
- fundamental financial analysis used within a time horizon not generally covered by consensual market practitioners;
- important industry contacts and relationships with company management;
- sound portfolio risk management and procedures; and
- the availability of a large and liquid universe of investable companies.
As part of its fundamental approach to investment the Investment Manager will perform a number of tasks, namely:
- set out a macroeconomic and microeconomic analysis of trends which allows a directional feel for the likely growth of various products; and
- assess the regulatory environment.
The results of this “top down” methodology will focus attention on the optimum areas for investment.
Typically investigation and analysis will be used by the Investment Manager to develop financial modelling of a company’s expected profit and loss and balance sheet items.
The Investment Manager believes that the benefits of such an approach should become apparent over the medium term. It is the Investment Manager’s view, evident from research published by the large investment houses, that most institutional forecasts and investment horizons have generally no more than a one year prospective view. There is also a common consensus approach of using historic business performance as the dominant forecasting parameter for future growth of a business.
The long and short position held by the Master Fund will seek to take advantage of the limited approach adopted by the consensus research model. Historic business performance will not be relied upon as the sole forecasting tool.
It is expected that long positions will generally have the following characteristics:
- companies that are involved in growth segments that are judged to be category winners and are well managed;
- companies that are in a strong competitive position, perform well within business segments and which consensus forecasts fail to reflect. They will also be judged to have good management; and
- companies that are well positioned but where management change has been necessary in order for the potential to be realised.
Short positions will generally be an integral component of this portfolio’s investment programme. The positions are expected to contribute positively to the performance of the Master Fund’s portfolio as well as to mitigate the effects of a major stock market decline. The following characteristics will generally be apparent:
- Companies that are poorly managed and are exposed to poor industry fundamentals.
- Companies where the chosen business model and strategy appears to be flawed.