Portfolio Update
- Puts/Hedges: Our Man opened a position Short Brazil,
through purchasing out of the money Jan-15 put options on iShares Brazil Index
(EWZ). The position reflects a multitude
of factors including Our Man’s negative view on China (Brazil being a large
supplier of raw materials to China), the weak technical picture, the positive
view on the US Dollar (the implicit short of the Brazilian real in the trade)
and the potential issues surrounding and arising from (the continued) credit growth in Brazil.
Performance Review
November proved a decent month for the portfolio, which gained 1.1%
putting the performance at +1.3% YTD.
The performance was driven by the portfolio’s Asian exposure, through the Currencies (+37bps) and China Thesis (+84bps) books. In the Currencies book, the short position in the Japanese Yen drove performance more than offsetting the Euro’s strength against the dollar. In the China-Thesis book, the fund benefited from its short position in the Australian dollar but especially its exposure to Chinese A-Shares.
Elsewhere, the portfolio suffered small but persistent losses with the Absolute/Bond Funds (-8bps), Other Equities (-2bps), NCAV (-2bps), Puts/Hedges (-9bps) and Energy Efficiency (-8bps) all costing small amounts of money.
Portfolio (as at 11/30 -
all delta and leverage adjusted, as appropriate)
17.6% - Other Equities (GREK, EWP
and EWI)13.4% - Bond/Absolute Return Funds (DLTNX and HSTRX)
7.9% - Value Idea Equities (THRX, and DRWI)
1.0% - NCAV Equities
0.2% - Energy Efficiency (AXPW, and XIDE)
-2.4% - Hedges/Put Options (premium of 44bps in EWZ Jan-15 puts, 24bps in EWJ Jan-15 puts, and less than 1bps in XLP Jan-14 puts, in XLB Jan-14 puts and in EWG Jan-14 puts respectively)
-12.4% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares)
-38.7% - Currencies (EUO – Short
Euro, YCS – Short Japanese Yen)
28.5% - Cash
Disclaimer:
For added clarity, Our Man is invested in all of the securities
mentioned. He also holds some cash and a few other securities (of
negligible value). You should not buy any of these securities because Our
Man has mentioned them, but should do your own work and decide what’s best for
you.
