The fund was up 3.00% as gains from long positions in fixed income outweighed small losses in equities and commodities.
Equities were mixed across the globe as plenty of unknowns remain in the market. These include continued U.S. – China trade talks, Brexit uncertainty and signs of slowing global economic growth. This had little effect on the portfolio as the fund currently sits at all-time lows in equity exposure. One clear trend that emerged was unified central bank action to help support financial markets. The European Central Bank drastically lowered growth forecasts and pledge to keep rates low through short term rates and long-term refinancing activities. Meanwhile, the Fed signaled no rate hikes in 2019 and announced an end to quantitative tightening in September. The ECB moves helped our fixed income positions in that region, while the Fed’s action caused us to open long positions across the curve domestically.
Elsewhere, the energy complex continued to grind higher, causing some pain and led to us closing our short Brent Crude Oil position. Gold was up intra month but ended essentially flat, and grains fell dramatically at the end of the month. Meanwhile the fund remained long the USD versus most major currencies despite some volatility that occurred around the Fed announcement.Performance (as of 3/31/2019)
Given the current historically low equity exposure in the fund, we expect our returns from other asset classes to reduce our correlation to the broader stock markets. However, if equities continue to gain and hit all-time highs the fund can adapt and re-enter long positions. The fund has less positions than average but added a significant amount into Fixed Income in March.
Moving forward these long positions in fixed income and relative U.S. dollar strength are the clearest themes in the portfolio. Given the lack of trends across the globe, the fund maintains significant flexibility to capitalize when trends emerge.
There were small losses in equities but the fund is at all time low stock exposure.
Fixed income gains were broad based with most gains coming out of the Eurozone, meanwhile we added positions in the U.S.
The long U.S. Dollar position produced small gains despite siginficant intra month volatility.
Meats were responsible for most of the losses in commodities while grains were a source of returns.