Benefits of investing in the Fund

Investing in the Funds offers a range of benefits including:

Investor Suitability

These Funds may be suitable for you if:

Investment philosophy

At K2, we focus on delivering superior risk adjusted returns for our clients over the long term. We invest in equities to generate positive returns and aim to preserve our clients' capital when market conditions change.

K2 has a flexible investment style as we believe that there is no one uniform cycle across the investment universe. By adopting the most appropriate style (for example, growth, value, momentum or income) that is best suited to the current market conditions allows K2 to maximise risk-adjusted returns.  Investment opportunities can come from any number of areas and as a result K2 incorporates top down macro-economic analysis with bottom up stock selection.

Each of K2's experienced investment managers brings their own investment style and methodology to our portfolios, combining their individual research with direct contact with companies.  Investment managers are encouraged to invest autonomously and pursue investment opportunities within a well-documented framework.  As a result, K2's portfolios tend to be high conviction and index unaware.  The investment team will always examine key investment variables, however, it is the team's ability to identify major investment themes and catalysts on a timely basis that gives K2 its competitive advantage. 

In addition to identifying undervalued stocks, K2 has the ability to actively manage equity market exposure and currency exposure as well as having the ability to short sell. These provide K2's portfolio managers with additional tools to deliver superior risk adjusted returns for our clients.

Investment strategy

K2 employs a top-down macroeconomic view with bottom-up stock selection to identify investment opportunities.

Continuous macro-economic analysis of market conditions determines each Fund's net equity exposure. This top down overlay provides our investment managers with the autonomy to invest in a benchmark unaware manner, in sectors and regions that they believe will add the most value.

K2's investment strategy intends to produce investment returns by:

• adopting a flexible investment style that reflects the economic cycle;
  
• actively adjusting net equity exposure;
  
• identifying major themes or catalysts in a timely manner;
  
• being index unaware with a Long bias; and
  
• allocating capital dynamically.

How we invest your money

Types of Assets Held

The K2 Australian Fund invests in listed equities in Australia and New Zealand.    

If deemed appropriate, the Funds may hold up to 100% cash.

Consistent with typical industry practices, the reference to listed equities includes investments in entities that plan to list on the relevant securities exchange within the next 6 months.

The Fund may also make other investments as permitted by its constitutions. The Fund may also use exchange-traded and over-the-counter derivative instruments. Equities are denominated in their local currency. Currency is taken into account at the portfolio level and positions are adopted purely as a hedging tool to reduce overall currency risk.

Derivatives

If used, derivatives may include swaps, futures, options and forward contracts. Such instruments are used within the Fund sparingly and the Fund does not have pre-determined allocation ranges for these asset types. K2 will only engage reputable financial institutions (such as the Prime Broker) as a derivative counterparty.

Short Selling

Short Selling may be used when specific opportunities or market conditions have the potential to increase returns. Short positions are subject to diligent ongoing exposure risk review by the investment team and stringent stop loss guidelines.

Liquidity

As the Fund only invests in listed equities, under normal market conditions K2 reasonably expects to be able to realise at least 80% of the Fund's assets, at the value ascribed to those assets in calculating each Fund's net asset value, within 10 business days. K2 monitors the Fund's portfolio on an ongoing basis having regard to the overall liquidity profile of the Fund's underlying investments.