The Global Fund (USD) gained 3.56% in February bringing the YTD return to 3.31% and the rolling annual return to 34.39%.
All ten themes in the portfolio made money in the month. The managers in the US Recession theme cover widely differing sectors and capitalisation tiers but all managed to find things that worked during February. In European Economic Change too, the results were solidly positive, in several cases contributed by skilful stock selection on the short side. Global Financial Sector Dislocation is the story of the moment, and there were rich pickings for the specialists in this field. Dislocation Insurance produced a healthy payout despite the steadier tone to markets than was evident in January and has been on display since. The volatility specialist included in the theme made a welcome contribution. Deteriorating conditions in credit markets continued to provide opportunities to the managers in this theme too. Taking the Credit, Financial Sector and Dislocation themes together, the portfolio has 45% of its capital allocated to managers whose current stance is that financial markets are likely to be confronted with more bad news than good. The news environment improved somewhat in February. Yet, the fact that all three of these themes still made money in the month illustrates an important point: the value of the thematic hedges that are built into the portfolio is not limited to periods of outright market weakness. One manager in our Japan Corporate Events theme produced a double digit contribution, reflecting both his skill and the continuing flow of event opportunities in Japan, widely ignored as it is by non Japanese investors. His fellow Japan specialists all made money too.
We have also produced an additional comment for February.