Hugh Hendry, manager of Eclectica Asset Management had a tough start to the year, but thanks to Japanese robots, his UCITs fund was able to close the year strongly, up by 2%. In a letter to investors, Hendry summed up his flagship fund’s performance in 2014.
Even though there were significant falls across markets in Europe, the United States and Japan, the Fund was able to finish the year on a strong note, with a 1.7% gain in December. This meant that the net return for the year was +2.1%.
Strategies related to China showed a 1.4% increase in aggregate, an improvement resulting from equities as well as FX. According to the letter, the Fund closed the year with a 0.9% profit from its short against the Australian dollar. A tactical long position situated in Hang Seng CEI futures was also able to produce a positive return of 0.5% amid a resurging Chinese stock market.
Long DM equity holdings cost a notable 2.1%, and was by a long margin the biggest drag on performance last month. Losses were spread across low beta positions in tobacco and pharma, global internet stocks and the European banking sector.
However, gains of 0.9% from a new global deflation strategy and 0.7% from a long position in the US dollar market were able to reduce the aggregate loss for the Long DM theme to 0.5%. the global deflation strategy involves shorting currencies of economies that are trade-dependent and whose governments intervene in foreign exchange markets so that they can compete with traders exporting in the European euro and the Japanese yen.
30-year US treasuries were able to give the fund a gain of 1.2% whereas the fund gave back -0.4% from its holdings in Japanese robotics manufacturers and Nikkei index futures.
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