Liquidity Update Of Aurora Absolute Return Fund

  • Jan 07, 2019 AEDT
  • Team Kalkine
Liquidity Update Of Aurora Absolute Return Fund

Aurora Absolute Return Fund (ASX: ABW) is an investment fund of Aurora Funds Management Limited (Aurora) based out in Australia. Aurora is engaged in generating a return through its absolute-return strategies. It caters to high net worth, retail and institutional investors.  The company specializes in investments that provide investors with positive risk-adjusted returns. These returns are independent of benchmarks or investment cycles.

The company is managing various funds of which Aurora Absolute Return Fund was launched in July 2006. The fund targets to achieve income return while preserving the capital of the fund. The fund is not aimed towards replicating the standard industry benchmarks; therefore, its performance is not dependent on the movement in the stock market, or any specific assumption or key market parameter.  

The investment strategy is managed by the Aurora Fortitude Absolute Return Fund (AFARF) along with the Aurora Absolute Return Fund. The AFARF is an unlisted fund whereas ABW is a listed fund.

The Master Fund is currently paying in cash, a distribution of at least 1% of Net Asset Value (NAV) per quarter, along with an available franking credit which is paid on an annual basis. The amount of Fund’s unit price, as well as the distributions paid from the Master Fund to unitholders, may fluctuate on a y-o-y basis.

On 4 January 2019, the fund provided its liquidity update which stated that the redemption ceiling for the combined redemptions for the 31 March 2018 quarter and the 30 June 2018 quarter would be 10% of the total FUM as at 30 June 2018.

In order to process the redemption requests where Aurora considers it irrelevant to realize fund investments, the company may use its funds to acquire units for which redemption requests have been received. In this case, the units will be considered as purchased by Aurora for a price equal to the applicable Redemption Price. They will not be cancelled.

Further, Aurora confirms that ABW unitholders and Master Fund unitholders will receive approximately 39% of their outstanding redemption monies based on total redemptions as at 30 June 2018.

As per today’s report, the company estimated a NAV per unit of $0.29 as on 4 January 2019. The AFARF has invested in Molopo Energy Limited (MPO) whose trading got suspended from ASX on 27 July 2017. AFARF reassessed the value of Molopo from $0.135 per share to $0.036 per share which after further reassessment was valued at $0.026 per share. The MPO share represented circa 15% of the value of the assets of the Trust.

Now, let us quickly look at the performance of Aurora Absolute Return Fund’s stock and the return it has posted over the last few months. The stock is currently trading at $0.215 with no movement in the day’s trade. During the past year, the stock generated a negative return of 57 % and produced a negative return of 2.27% over the past month. The fund has 8.13 million shares outstanding with the market cap of circa $1.75 million.


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