Year by year client net return p.a (after management charges) on capital invested:

+44.81%(2015) ; +59.75%(2016) ; -45.54%(2017) ; +25%(2018/9) ; +24%(2019/20).

The 2015 and 2016 results were good and also consistent with the private trading results in the 3 years prior. The product that combined turnover and margin most effectively was the Quinella which, with HKJC volume rebates, is highly attractive mathematically. Accordingly it was the core investment product.

For the 2017 budget, the turnover level was increased given the accumulated confidence of the previous years, Consequently , despite a small negative margin, the loss was substantial negating the 2016 profit.

The review of season 2017 performance revealed our investment model was distorted by the J.Moreira effect way beyond expectations. Betting markets were extraordinarily influenced by his success and following causing our quinella model to qualify extra horses to bet because of their “value price”.

The statistics were stunning and unprecedented: J.Moreira – 171 wins/104 seconds and Z.Purton – 107 wins/92 seconds. By comparison, D.White dominated the rider’s premiership for 13 straight seasons from 2001 scored a century once only in 2006 (114 wins).

What is the Moreira effect? Moreira ridden horses which would be normally priced 3.00 (33%) would run at 2.25 (45%). This 12% differential is transferred to other runners in the pari-mutuel pool except for Purton’s rides. Often this means that horses assessed 12.00-17.00 (7%probability) run at 21.00 – 31.00 (4%).

Our model accordingly qualified 6-9th ranked horses as value as they became double the assessed odds. Bets on these extra horses proved futile and smashed the positive margin.

The quinella model had been consistently successful over the previous 5 years but it faltered under the unique dominance and consequent market price influence in the target quinella betting pool.

Moreira and Purton rode 40% of the winners in the 2018 season. This dominance did not change in the 2019 season with Purton placing either 1st or 2nd 41% of his rides and Moreira 33%. This is the new norm; clearly we needed to react with a new trading model.

The business plan for 2018 was to tread softly while navigating a turnaround employing new data science techniques. The introduction of a mix of product bet types proved successful resulting in a return of capital of 25% to our members over the 4 funds during 2018/19. The mix of target pools reduces volatility. However the Quinella in HK is by far the biggest pool therefore our volume was contained while the focus was on margin.

We came into the 2019/20 season with confidence we could increase turnover within the spread of pools. However the trade was only even turning into the New Year .This period was dominated by two Chinese trainers both with 24 year long established moderate strike rates of 7-8% but now performing at 20 and 16%.

Meanwhile ,the champion trainer of the previous 6 years, Australian John Size ,had been reduced to their previous moderate level.

Adjustments to the trading model and strategy were employed in January which increased margins well beyond budget. The 2019/20 funds returned members 24% net on invested capital in a difficult season with restricted turnover. Established norms were truly challenged .However, the second half year produced annualized net returns comparable with 2015 and 2016

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