Easy access to global markets with DMKT
The AMP Capital Dynamic Markets Fund (Hedge Fund) (ASX code: DMKT) is now trading on the ASX.
DMKT is the AMP Capital Dynamic Markets Fund made available as an active exchange traded managed fund.
The existing unlisted fund was established in 2011 by Nader Naeimi, AMP Capital’s Head of Dynamic Markets, and Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist, who have worked together for more than 15 years. The new exchange traded managed fund has the same investment strategy, target portfolio and is managed by the same team as the existing Dynamic Markets Funds, it just offers the additional benefits, over a five-year time horizon, of ease and flexibility as it is trading on the ASX.
The fund's defining characteristics
The fund has a number of defining characteristics. It uses dynamic portfolio management, which allows the fund manager to respond quickly to opportunities in global markets, including fast movement into favourable global opportunities and away from overvalued and over loved assets, which can be hard for investors to do.With the launch of DMKT, investors can access this active capability and up to 80 different local and global investments, including global equities, commodities, foreign exchange, property and cash in a single trade.
As Tim Keegan, AMP Capital’s Head of SMSF and Self-Directed Wealth explains, “DMKT seeks to buy assets in markets when they're looking inexpensive and sell them when they're overvalued. So it dynamically changes its allocations to certain assets to benefit from market movements over a five-year time horizon.”
As Keegan explains, the fund helps investors generate differentiated returns given current market conditions. “With heightened levels of volatility in the Australian equity market and the lowest interest rates in 50 years, it’s more challenging than ever for SMSF investors to improve their returns just by relying on Australian equities, cash and term deposits. Which is why it’s so important for investors to be able to easily and quickly access a diversified basket of global opportunities in one trade,” he explains.
Nader Naeimi illustrates how the fund uses a goals-based approach, which means rather than following a benchmark like the ASX 200, it seeks to achieve a return of CPI* plus 4.5 per cent pa over a five-year time horizon.
“This means when markets are doing well, our aim is to maximise returns, whereas when markets are vulnerable our aim is to protect our gains,” he explains.
Naeimi demonstrates that when a portfolio is managed against a benchmark, the manager is constrained by the return the market delivers. So if the benchmark falls, investors who have put their money in a fund that tracks a benchmark can expect the value of their funds to fall. Whereas with a fund such as DMKT, the fund manager aims to achieve a positive return over a five year time horizon, no matter how the market performs over this period.
* The Reserve Bank of Australia inflation rate (Consumer Price Index) – trimmed mean
The opportunities active management presents
He says one of the disadvantages of investing in funds that track a benchmark is that the fund manager has almost no flexibility to enter and exit trades based on their view of the market. Rather the mandate is simply to invest the fund’s money in proportion to the way assets are represented on the benchmark.
“With this fund, if you don't like an asset class, if it’s vulnerable or expensive, you don’t have to hold it. But if you like an asset class, you can increase your holdings,” he says.
For instance, at the moment the fund’s allocation to bonds is minimal, because they are deemed expensive. In contrast, most other diversified funds would have a larger allocation to this asset class.
In terms of the investment capabilities of the fund, Naeimi explains it’s a ‘top-down’ fund, which means rather than selecting individual companies as investments, it is focused on identifying under-appreciated markets that have the potential to deliver strong returns.
The fund benefits from AMP Capital’s extensive experience in portfolio construction, which determines how much to allocate to each market, ensuring the portfolio is not too focused on only a few areas.
DMKT is now trading on the ASX under ticker code DMKT, providing investors with access to active management more simply than ever before. AMP Capital also has two other active exchange-traded managed funds that are already trading on the ASX. The AMP Capital Global Listed Infrastructure Securities Fund (Unhedged) (Managed Fund) (ASX code: GLIN) provides access to a range of diversified global listed infrastructure securities and the AMP Capital Global Property Securities Fund (Unhedged) (Managed Fund) (ASX code: RENT) provides access to high quality global property securities, all in a single trade on the ASX.
While these funds are some of the first exchange traded managed funds to be offered to investors, it’s likely more will follow as investors appreciate the benefits these funds offer.
- Returns are not guaranteed – there is no guarantee that the fund’s investment strategy will be successful or that the investment objective will be achieved
- Asset allocation - there is no guarantee that the Fund’s asset allocation strategy will provide positive investment performance at all stages of the investment cycle
- Share market investment – adverse share market movements could result in capital losses, particularly over the shorter term
- Liquidity – although the units are quoted on the AQUA market of the ASX, there can be no assurance that there will be a liquid market for units, and no assurance that there will be a liquid market for the Fund’s investments
- ASX trading price – the trading price of units on the ASX may differ from the Net Asset Value (NAV) per unit and the indicative NAV (iNAV)
- Market making – as the responsible entity, BetaShares, acts a market maker in the Units on behalf of the fund, the fund will bear the cost and risk of these market making activities
Access up to 80 global opportunities in a single trade
In a world where market volatility and low growth are the new norm, asset allocation is more important than ever. However accessing asset classes globally and outside of the usual places in order to do this is difficult.
AMP Capital’s Dynamic Markets Fund (Hedge Fund) ASX Code: DMKT, an exchange traded managed fund, offers a low cost solution to global portfolio diversification with a real return objective.
Important note: This article has been prepared by AMP Capital Investors Ltd (ABN 59 001 777 591, AFSL 232497) ("AMP Capital"). BetaShares Capital Ltd (ACN 139 566 868, AFSL 341181 ("BetaShares") is the responsible entity and the issuer of units in the Fund. AMP Capital is the investment manager of the Fund and has been appointed by the responsible entity to provide investment management and associated services in respect of the Fund. Investors should consider the Product Disclosure Statements (PDS) for the AMP CAPITAL DYNAMIC MARKETS FUND (HEDGE FUND), AMP CAPITAL GLOBAL INFRASTRUCTURE SECURITIES FUND (UNHEDGED) (MANAGED FUND), and AMP CAPITAL GLOBAL PROPERTY SECURITIES FUND (UNHEDGED) (MANAGED FUND) before making any decision regarding the Fund. The PDS contains important information about investing in the Fund and it is important investors read the PDS before making a decision about whether to acquire, continue to hold or dispose of units in the Fund. Neither BetaShares, AMP Capital, nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this document. Past performance is not a reliable indicator of future performance. While every care has been taken in the preparation of this email, neither BetaShares nor AMP Capital makes any representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. This email has been prepared for the purpose of providing general information, without taking account of any particular investor's objectives, financial situation or needs. Investors should, before making any investment decisions, consider the appropriateness of the information in this email, and seek professional advice, having regard to their objectives, financial situation and needs.