In the listed investment company’s 2013 financial report, K2 stated that “funds were aggressive on their market exposure with all funds averaging over 90 per cent net exposure throughout the year”. However, the company also admitted that “some gains were lost in the final two months of the financial year”.
K2 runs three major funds: the Australian Absolute Return Fund, the Asian Absolute Return Fund and the International Absolute Return Fund, with two of those outperforming their respective indices.
The Australian fund outperformed the index, gaining 26.1 per cent compared to 20.7 per cent for the All Ordinaries Accumulation for the year.
The Asian fund also returned a strong 30.2 per cent, against 22.5 per cent for the comparable index.
However, the international fund did not outperform the equivalent index, which returned 30.5 per cent, compared to the 24.5 per cent for K2’s fund.
K2 stated that it continues to have a strong balance sheet with excess cash reserves and no borrowings.
The firm’s key operating roles across the business remained stable throughout 2013 and there were no changes to major service providers.
The company believes K2 has the structure to prosper in the Australia market: “The growing competitive pressure across the financial services industry is seen none more than in funds management,” K2 chairman Campbell Neal said.
“Although this pressure is unlikely to dissipate in the future, outperforming, reputable fund management firms will continue to prosper... [However,] K2 believes that we have the guidelines, team and experience in place to be profitable in the most challenging times.”
