While July proved to be a much better month for hedge funds compared to the turbulent June, the gains in last month seem to have been limited to equity long/short funds. Most of the macro funds struggled with returns in last month—bigwigs like Discovery Global Macro and Global Opportunity were down 0.62% and 1.2% respectively. Brevan Howard Master Fund was down 0.85%, Fortress Asia Macro was down 1.31% and GAM Global Rates Fund was down 0.66%. BlueCrest Emerging Markets, Caxton, BTG Pactual and TT International were up in July. See Global Macro Funds that are underperforming in August.
Woodbine Capital, a global macro fund, slumps
Woodbine Capital, a global macro fund, slipped -2.48% in July, trimming year to date gain to +5.7%. The principal detractor to performance was long in USD which stumbled around Fed’s dovish comments about easing. The macro fund has longs in USD against Brazilian real, Australian dollar, pound and Japanese yen. The major holdings of Woodbine include longs in Japanese and U.K. equities and shorts in the above listed currencies. Woodbine also holds tactical shorts in Chinese yuan. UK is another major economy where central bank is insisting on its commitment to keeping interest rates low, Woodbine sees continued low rates in UK which will support equity growth in the region.
Macro fund, North Asset Management has modest returns
Another macro fund, North Asset Management’s MaxQ fund took a gain of +0.35% in July, taking the year to date gain to +10.11%. The fund is gearing up for a very volatile fourth quarter as it sees the Fed tapering off QE in September. MaxQ was able to profit from some counter trend shorts in EMs, which the fund exited last month. However it believes that this will continue to be a profitable theme later in the year as well. The fund is also short in commodity driven currencies which are vulnerable to Chinese exports, MaxQ is betting against Canadian dollar. The fund sees high leverage in private sector and housing as a headwind to Canadian economy which will impede growth going forward. Other positions of the fund include shorts in US rates versus European rates and long in USD versus EUR.
MaxQ sees European economy as out of recession but says that the region is struggling through balance sheet recession and growth will remain patchy.The fund thinks that ECB is focused on maintaining interest rates at the current levels and it is unlikely that there will be any further declines. The fund has long in Italian versus French government bonds, however MaxQ is looking to reduce exposure in Italy as PM Berlusconi’s position worsens.