Regal Investment Fund
Exposure to a range of alternative investment strategies
The investment philosophy of RF1 is grounded in the belief that a diversified portfolio of assets, using a range of investment strategies backed by long-term capital, is key to the potential of achieving greater risk adjusted returns over the long term.
In order to achieve its objective, RF1 will provide investors with exposure to a range of investment strategies managed by Regal, where strategy allocations are adjusted over time depending on prevailing market conditions.
Regal Investment Fund allocation as at December 2024
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Investing with Regal
The Regal Investment Fund provides investors with exposure to Regal's investment expertise, including our 20-year long track record of managing alternative investment strategies. The investment team members have, on average, over ten years' experience in financial markets both in Australia and overseas, with extensive experience of investing through many market cycles. The team has experience on the buy and sell side, fundamental investing, sales and research, long-side and hedge fund investing as well as investment banking and capital markets.
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Risk
The Fund may appeal to investors who are seeking risk-adjusted absolute returns from alternative investment strategies to diversify their investment portfolio. Investors should regard any investment in the Fund as a long-term proposition and are to be aware that substantial fluctuations in the value of the portfolio held by the Fund may occur on a month-to-month basis over that period. A detailed explanation of risks is available in the Product Disclosure Statement.
Documents
News and Insights
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Learn more about RF1 and alternative investments
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What is RF1? - Interview between David Wright, Zenith Investment Partners and Phil King, Regal
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How to use RF1 in portfolios - David Wright, Zenith Investment Partners
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Alternative Investments: What, how and why? Used with permission. Regal did not pay for this video.
Frequently asked questions
How to invest in RF1
As an ASX Listed Investment Trust, Units in RF1 can be bought and sold on the ASX via your broker or financial adviser. The ASX ticker is RF1.
Who is the Responsible Entity of the Fund, and the issuer of the Units and the PDS?
Equity Trustees Limited (ABN 46 004 031 298, AFSL 240975) is the Responsible Entity of the Fund and the issuer of the Units and the PDS. The Responsible Entity holds an AFSL that permits it to act as Responsible Entity of the Fund.
What is the Fund’s Investment Objective?
The Fund’s Investment Objective is to provide investors with exposure to a selection of alternative investment strategies managed by Regal, with the aim of producing attractive risk adjusted absolute returns over a period of more than five years with limited correlation to equity markets.
The Fund may not be successful in meeting its Investment Objective.
How is RF1’s portfolio constructed?
The Fund’s portfolio has been constructed using multiple Regal Investment Strategies. The Regal Investment Strategies are alternative investment strategies implemented by Regal from time to time. The Regal Investment Strategies include but are not limited to nine investment strategies that the Manager has used to construct the Portfolio:
- Market Neutral Strategy: This strategy is a high conviction, fundamental strategy that seeks to maximise returns with moderate risk and little correlation to the broader equity markets.
- Global Alpha Strategy: This strategy aims to deliver consistent, positive returns with relatively low levels of volatility and regardless of movements in the underlying equity markets.
- Australian Small Companies Strategy: This strategy focuses on generating positive returns and gaining exposure to the rise and fall in value of selected small cap listed entities in Australia (and generally has higher levels of volatility than its benchmark, the ASX Small Ordinaries Accumulation Index).
- Australian Long Short Equity Strategy: This strategy focuses on generating positive returns in excess of the S&P/ASX 300 Accumulation Index over a rolling five year period and focuses on generating positive returns by gaining exposure to the rise and fall of listed equities in Australia.
- Emerging Companies Strategy: This strategy aims to generate positive returns by gaining exposure to selected unlisted companies that are looking to list on a stock exchange in the short to medium term, unlisted expansion capital and listed microcap companies.
- Global Equity Long Short Strategy: This strategy provides investors with exposure to a concentrated portfolio of long and short positions across global equity markets (primarily ex-Australia) that represent the highest conviction positions across the Regal group. The Strategy utilises the significant global investment expertise and research capabilities across the Regal group.
- Water Strategy: This strategy invests in Australian water entitlements and water allocation assets, aiming to generate investment returns by the leasing of water products to end users and the appreciation in value of water assets held.
- Resources Royalties Strategy: This strategy invests in natural resource and renewable royalties, commodity streams and royalty related structured solutions with the aim of producing attractive risk-adjusted returns that are uncorrelated to traditional financial assets.
- Private Credit Strategy: This strategy invests in bilaterally originated loans to middle market companies, to corporates owned by financial sponsors, loans secured by pools of financial or real assets, as well as other idiosyncratic loans, primarily in Australia & NZ.
What is the percentage allocation of these strategies for RF1?
The current1 exposure ranges for the Regal Investment Strategies, upon initial investment, are below:
- Market Neutral Strategy 0%-50%
- Global Alpha Strategy 0%-25%
- Australian Small Companies Strategy 0%-25%
- Australian Long Short Equity Strategy 0%-25%
- Emerging Companies Strategy 0%-25%
- Global Equity Long Short 0%-25%
- Water Strategy 0%-25%
- Resources Royalties Strategy 0%-25%
- Private Credit Strategy 0%-25%
The Manager will select multiple Regal Investment Strategies and determine the relative weight given to each Regal Investment Strategy at any given time.
1As at April 2024. For the latest exposure ranges by Strategy, please refer to the most recent Monthly Investment Update for RF1.
What is the track record of the Fund and the experience of the investment team?
The track record of the Fund is published monthly on the Monthly Investment Update for RF1.
The Manager’s Investment Team members have, on average, over ten years’ experience in financial markets both in Australia and overseas, with extensive experience of investing through multiple market cycles. The Investment Team has experience on the buy and sell side, fundamental investing, sales and research, long-side and hedge fund investing, as well as investment banking and capital markets.
What is the Fund’s distribution policy?
The Responsible Entity intends to distribute all distributable income annually, but it may do so more frequently at its discretion.
Will the Fund actively manage currency?
The Fund will invest in international investments. International investments create an exposure to foreign currency fluctuations which can change the value of the investments measured in the Portfolio’s base currency (AUD).
The Portfolio’s exposure to foreign currency risks may be naturally hedged to the extent the value of assets (Long Positions) offsets the value of liabilities (Short Positions) denominated in each foreign currency within the Portfolio. If net exposure to a particular currency exceeds 5% of the Fund's NAV, the Manager will seek to manage the foreign currency risk in respect of that currency by hedging to the Fund’s base currency. The Manager has the ability to manage the currency exposures of the Portfolio using foreign exchange forwards and contracts.
Will the Fund hold cash?
Up to 100% of NAV can be held in cash and cash equivalent instruments.
How much leverage can the Fund deploy?
The Fund’s maximum allowable gross gearing (sum of the market value of its Long Positions and the market value of its Short Positions) is 300% of its NAV and the Manager expects it will typically be between 200% and 300% of the Fund's NAV.
Will the Fund be leveraged?
Leverage is created when the Fund's gross gearing (i.e. the sum of the market values of Long Positions plus the market values of Short Positions) is greater than the amount of investors’ capital. Debt finance as well as Derivatives and Short Selling can create leverage within the Portfolio.
Leverage can increase the level of net gearing (i.e. the market value of Long Positions less the market value of Short Positions) and gross gearing of the Portfolio and can magnify gains and losses within the Portfolio. With a view to managing this risk, net gearing will not exceed 150% of the Fund's NAV and gross gearing will not exceed a maximum of 300% of the Fund's NAV.
This may give rise to the possibility that Positions may have to be liquidated at a loss to meet a margin call and not at a time of the Manager’s choosing. In case of a sudden drop in value of the Fund’s Positions, the Fund might not be able to liquidate Positions quickly enough to repay its borrowings, further magnifying losses incurred by the Fund.
What is a short position (short selling)?
A short position is created when the Fund borrows securities from a lender and sells them to a third party, generating cash proceeds. To close the short sale, the Fund must acquire equivalent securities on market and return them to the lender, with the intention of buying back equivalent securities. The Fund makes a profit if the price of the shorted security declines in value in the period between the Fund selling the borrowed security and acquiring the equivalent security.
Is short selling risky?
Short selling can involve greater risk than buying a security (i.e. a Long Position). Loss associated with a Long Position is generally restricted to the amount invested. Losses on a Short Position continue to grow as the price of the borrowed security rises and therefore can be greater than the amount originally invested. Additionally, there can be no guarantee that the securities necessary to cover a Short Position will be available for purchase.
Within the Regal Investment Strategies, short selling may be used to manage certain risk exposures in the Portfolio and increase returns. Short selling can be used as a form of leverage that may magnify the gains and losses achieved in the Portfolio. The Manager seeks to manage the risks associated with short selling in a number of ways including when shorting as part of a fundamental strategy using a research process to identify weaker businesses, sometimes with poor management and which are over-priced relative to the Manager's assessment of their intrinsic value.
What is a derivative?
A security, such as an option or futures contract whose value depends on the performance of an underlying asset and includes exchange traded derivatives and over-the-counter derivatives.
Are derivatives risky?
Derivative transactions may be highly volatile and can create investment leverage, which could cause the Fund to lose more than the amount initially contributed to the transaction. Trading in over-the-counter derivatives will generally require the lodgement of Collateral or credit support, such as a margin or guarantee with the counterparty, which in turn gives rise to counterparty risk.
How will RF1 use derivatives?
The Fund can invest in Derivatives, including options, futures, swaps and equivalent cash settled instruments, which are traded on an exchange or non-exchange traded Derivative instruments dealt on an Over-the-counter basis. The Manager may use Derivatives for hedging and non-hedging purposes.
In addition, the Manager may use Derivatives to manage risks within the Portfolio. For example, the Manager may use Derivatives to reduce exposure to equity markets from time to time or hedge the Portfolio into Australian Dollars.
To manage risks associated with Derivatives, the Manager will seek to deal with experienced counterparties that are subject to prudential supervision.
What are the Fees the Manager will receive from the Fund?
The fee structure is as follows:
- A Management fee totalling 1.5% per annum (plus GST) of the Fund's NAV; and
- A Performance fee of 20% (plus GST) of the Fund's outperformance against the RBA cash rate, subject to the Fund's NAV being greater than the Fund’s High Water Mark.
Is there an ongoing communications and marketing plan?
Yes. Within 14 days after the end of each month, the Responsible Entity will release to the ASX a statement of the net tangible asset backing of its Units as at the end of that month.
The Responsible Entity will also release to the ASX (and place on its website) reports, prepared by the Manager, to keep Unitholders informed about the current activities of the Fund, the performance of the Fund's Portfolio and the investment outlook.
Who is Regal Funds Management?
Regal Funds was founded in 2004 and is a multi-award winning, specialist alternatives investment manager, 100% owned by Regal Partners. With a long heritage in fundamental long-short equity strategies, providing access to global, pan-Asian and Australian hedge fund and private market investment strategies.
Regal Funds is a four-times awarded Australian Alternative Investment Manager of the Year, providing wholesale investors with access to a wide variety of absolute return, market neutral and event-driven strategies, in addition to management of the ASX-listed Regal Investment Fund (ASX:RF1).
Does the Investment Team invest in the Fund?
Yes. Phil King, staff of Regal and associated entities hold significant investments across all of the Regal Funds including RF1.
What is the Managers relationship with the Fund?
The Fund has employed Regal Funds Management Pty Ltd as the investment manager of the fund.
What are alternative investment strategies?
Alternative investments are assets that are not considered to fall within traditional asset classes (being equities, fixed income and cash). Alternative investments typically have low correlation with these traditional asset classes which can make them desirable for portfolio diversification.
Alternative investment strategies include a broad range of strategies that typically involve investment manager skill in generating absolute returns that are not correlated to traditional financial assets. Common alternative investment strategies include private equity, venture capital, real estate, infrastructure and hedge funds. Hedge Funds, including equity long short strategies can be effective at generating absolute returns that are uncorrelated to equity markets and in doing so, assist in providing diversification in an investment portfolio.
Contact Us
If you are a securityholder and require assistance, please contact 1800 221 227 (within Australia)
8:30am to 5:30pm Monday to Friday (Sydney time) or email regalfund@linkmarketservices.com.au
You have the right to elect whether to receive some or all of these Communications in electronic or physical form and the right to elect not to receive annual financial reports at all. You also have the right to elect to receive a single specified Communication on an ad hoc basis, in an electronic or physical form.