Monday, January 22, 2018

Melbourne, 22 January 2018 – Australia Ratings has assigned a ‘STRONG’ investment rating to Karara Market Neutral Fund (“the Fund”).

A STRONG investment rating indicates a strong conviction that the fund can deliver a risk adjusted return in line with its investment objective; based on an investment rating scale used by Australia Ratings to indicate how well we believe a fund will perform against a range of risks.

The Fund is an Australian equity market-neutral fund; investing in products across large cap, small cap, mid cap and long only REIT and market neutral. The fund predominantly trades liquid Australian listed equity, property and infrastructure with moderate leverage.

Karara Market Neutral Fund is managed by Karara Capital and is currently open to wholesale investors. The fund was established in August 2016 and its aim is to outperform the RBA cash rate (after fees) over rolling five-year periods. The target is high single-digit/low double-digit returns per annum net of fees.

Australia Ratings’ analyst Daniel Liptak said “The Strong investment rating reflects the investment team’s solid experience.” Mr Liptak continued, “Performance history is relatively short and at this stage there is relatively low FUM-based revenue. While this would usually be highly concerning, that is not the case in this instance given the involvement and commitment of the Karara research and investment team members.”

Australia Ratings has also assigned its Product Complexity Indicator of ‘ORANGE’ indicating the fund as a more complexfinancial product. This indicates that the fund generates returns through a variety of non-standard investment strategies. Products of this type are often known as Hedge Funds. The strategies used include model-driven investment selection, return generation using derivatives, and a performance profile that does not track mainstream markets. This type of fund is typically used to diversify portfolio risk or to provide superior returns to the underlying market.

A full rating report is available from


Daniel Liptak, Director 03 8080 6684


Australia Ratings is a local, independent rating agency that provides timely and credible ratings information and research to the broader investment community. As an ASIC-licensed rating agency, we provide general advice by issuing credit ratings on debt securities and companies; and fund ratings on Australian managed funds. We are Australia’s only agency that holds a retail Australian Financial Services Licence (AFSL). This enables both retail and wholesale investors to use our credit ratings to help them gauge credit risk and complexity of financial products sold in the Australian market.

Rating opinions of Australia Ratings are determined by its analytical team in accordance with its rating methodology. The Board of Australia Ratings whose members include Jarrod Brown, Chris Dalton and Mike Dontschuk oversee the application of Australia ratings rating methodology and the integrity of the rating process.

About Australia Ratings’ Investment Rating

Our investment rating reflects Australia Ratings’ current opinion of a fund’s or an investment’s ability to achieve its stated investment objectives in the near term. The rating expresses a view on the expected consistency of the fund’s or investment’s performance within its peer or style group and on the fund manager’s ability to produce superior performance amongst its peers in the near term with due regard to the medium-term consensus view of the asset class to which the product is benchmarked.

A five-point scale is used to differentiate our opinion on how well we believe a fund will perform against a range of risks.

About the Product Complexity Indicator

Our proprietary colour-coded product complexity indicator (PCI) highlights the complexity level of an investment by its terms and conditions’ structure and transparency that may affect an investor’s return.



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