The Global Fund (USD) gained 0.99% in November bringing the YTD return to 36.55% and the rolling annual return to 38.66%.
November was the second consecutive month in which rising risk aversion characterised the behaviour of financial markets. Global equity markets fell over 4%, the S&P by 4.5%. The level of market stress was high and its impact was widespread. At the theme level, the portfolio contains two built in hedges both of which were profitable. The dislocation insurance paid out handsomely. Weakness in credit markets led the wider market decline and so provided a wealth of opportunities to the managers comprising the widening credit spread theme. By contrast, the managers in the asian consumer power theme found the going difficult; all four losing money. Both managers in the technology theme were also loss making. In each of the remaining portfolio themes, results were mixed. Three Japanese specialists made money. Either they were expecting trouble, or, in the case of the newest addition to the portfolio, were nimble enough to run net short in the first half of the month. One of the financial services specialists lost money but the other was profitable. Two of five European specialists made money and three out of six in the US theme were profitable too. Taken overall, half of the managers in the portfolio made money, and in amounts that outweighed the losses incurred by the other half. During the past 18 months, the priority for the portfolio has been to build its defensive strengths. Identifying themes that can make money when markets are stressed was the first part of this task. Investing with managers with the ability to run short books that can make a meaningful contribution to their results has been the second major goal. In both cases, these are continuing priorities, but it is gratifying that the fund has been profitable in both August and November, neither of which were easy months in which to generate a positive return. Looking forward, we do not see any signs that the environment is likely to get easier.