BH Global’s largest allocation, Brevan Howard Master Fund Limited gained a handsome 2.17 percent in Feb which takes the two month returns to just above 3 percent.
Managers of BH Global have decided to diversify their portfolio and have thus reduced the allocation in Brevan Howard Master Fund, the resulting changes will take effect in the next few months. The major profit makers for the Master fund were forex trades and positions in European rates, losses were incurred in commodity trading and interest rate volatility.
Other significant gains were reported by Brevan Howard Credit Value Fund Master Fund which was up 0.98 percent in Feb. The Credit Value fund generated returns from corporate credit and distressed bank loans. The fund also made huge gains from MBS positions.
Large detractors of February were, Brevan Howard Commodities Strategies Master Fund which was down 2.28 percent in February and failed to bag profits from any of its strategies and Brevan Howard Emerging Markets Strategies Master Fund which lost 1.7 percent in Feb. The EM focused fund lost across all of its strategies, forex, equities and credit reported losses.
Brevan Howard portfolio managers believe the fiscal drag from the $85 billion in budget cuts and increased tax rates will be the major decelerators of economic growth in the U.S. BH accepts Bernanke’s aggressively easy fiscal policy as the only option to keep markets upbeat and drive down unemployment numbers. BH expects the private sector to outperform by the end of this year and this will prove to be a major factor that drives growth.
On the subject of EU, the fund managers note the ever-increasing unemployment rates where numbers are highest in Spain and Greece. The only countries that have been successful in controlling unemployment are Germany, Belgium and Ireland. However for the first time the year-over-year inflation has declined below 2 percent in February and is expected to trend even lower by the end of 2013.