Stocks continued to be the lead story as the Longboard Managed Futures Strategy fund’s long exposure to equities supported the Fund’s +2.66% overall performance in July. Rising indices for emerging markets and several Asian stock markets contributed to profitability during the month. Major United States indices shrugged off repeated chaos in the White House and closed the month at or near all-time highs as a steady flow of positive news hit the tape.
In early July, the Department of Labor released a strong payroll number indicating that the U.S. created more than 200,000 new jobs. This was followed by a Federal Reserve two-day meeting on interest rates. As expected, the FOMC opted to leave U.S. interest rates unchanged even as the economic picture showed signs of improvement.
Along with a strong payroll number, household spending displayed steady growth. At the same time, inflation remains low. Meanwhile, U.S. corporate earnings reports were in full swing by month end. Aided by increased consumer spending and a weaker U.S. dollar, many major U.S. companies posted positive second quarter earnings.Performance (as of 7/31/2017)
Global currency trades against the U.S. dollar contributed positively to performance as well. Short positions in the U.S. dollar against the Czech koruna, New Zealand dollar and Australian dollar were particularly profitable. The portfolio also benefitted from long positions in euro trades against both the U.S. dollar and Japanese yen. Consensus among economists that the European Central Bank may shift its policy stance towards a tightening bias lent support to Europe’s single currency.
Although the equity and financial sectors contributed positively to the portfolio in July, commodities did not. The fund had several short energy positions at the beginning of the month. However, increased demand and smaller crude stockpiles resulted in an energy sector rally that also factored in our poor performance in that sector.
The fund also experienced net losses in the metals sector as New York silver and platinum rallied against our short positions during the month.