Wednesday November 12th, 2014
This 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 launched this month and ended October positive, seeing gains across equity and currency positions and losses in commodity positions. In equities the best performing sectors were consumer discretionary, staples and tech, while industrials and financials were the worst. Net long equity exposure was approximately 21% of NAV this month. In currencies, the best performer was short JPY. This month the BOJ unexpectedly increased the size of its stimulus program targeting longer dated bond purchases, outright domestic equity purchases and a weaker currency. The worst performer was long BRL which saw volatility going into its presidential elections which was eventually won by incumbent Rousseff. In commodities, the best performer was long soymeal, as prices spiked higher on short term inventory concerns. The worst performer was short soybeans which was dragged higher with the rest of the complex.
October was a bit of a roller coaster ride as markets sold off heavily in the first half of the month before bouncing back rapidly in the second half. Stock markets were initially dragged lower on fears of global slowdown as the IMF cut the global growth outlook while poor European economic data pointed towards a shaky recovery. Cyclical commodity sectors were hit hardest with energy and materials leading the sell-off. However, momentum shifted mid-month as the beginning of the ECB’s bond buying stimulus program combined with dovish Fed comments seemed to turn around the negative sentiment. Expectations of solid U.S. corporate earnings coupled with a strong GDP print helped drive a rebound in stocks. To close out the month, the Bank of Japan unexpectedly boosted its own stimulus measures accelerating purchases of bonds and domestic stocks, which gave a further lift to global markets.
This month commodities performance was mixed. The energy complex continued to see downward pressure from supply overhang. Gold broke lower as safe haven trades were exited and the dollar rallied. Grains bucked the trend and saw a squeeze higher on concerns that poor weather would negatively affect the harvest.
The U.S. dollar saw some initial weakness in October before rallying back later to close out the month strong. The loonie ended slightly weaker versus the dollar at 1.1260.