Monday December 8th, 2014
The Fund seeks to provide absolute returns that are not correlated to broader equity or bond markets. The Fund employs a multi-strategy approach by allocating its assets across various asset classes including equities, currencies and commodities.
The Fund was positive in November, seeing gains in currencies and losses in equity and commodity positions.
In equities, the best performing sectors were consumer discretionary, technology and healthcare while energy and materials were the worst. Net long equity exposure increased to 30% of NAV this month.
In currencies, the best performer was short Japanese yen. Japanese economic data was weak and the BOJ continued to encourage stimulus to boost the economy. Abe also unexpectedly delayed a proposed consumption tax. The worst performer was long Brazilian real, as uncertainty surrounding the appointment of Brazil’s new economic team was considered a negative. In addition, commodity exporting nations were generally under pressure this month.
In commodities, short Brent was the best performer as prices collapsed with the lack of OPEC support. Long copper was the worst performer as global growth risks and poor Chinese PMI’s weighed on the metal.
Stocks moved higher this month. In the U.S., generally strong data continued to support a positive economic outlook for 2015, and widen the economic gap between the U.S. and other developed countries. Conversely, Japan and Europe saw weakening economic data which prompted the BOJ and ECB towards even more aggressive stimulus measures in order to fend off deflationary pressures. In addition, the Bank of China unexpectedly cut rates to improve liquidity sending global stocks higher. Commodities were under pressure all month highlighted by an 18% plunge in crude prices. The end of month OPEC meeting was pointed to as a potential catalyst for stemming the fall in prices; however OPEC kept its production ceiling unchanged escalating its price war with other oil producing nations. The U.S. dollar pushed higher this month in particular against the Japanese Yen and currencies from commodity exporting nations. The loonie sold off in tandem with oil prices as USD/CAD closed at the year highs above 1.1400.