A global macro fund, Woodbine Capital, finally recorded a gain in September after several difficult months this year. Woodbine’s strategy rose 1.3 percent in the last month, bringing up YTD gains in the positive territory with +0.5 percent.
Mixed returns for global macro with few major gainers
Credit Suisse Global Macro Hedge Fund Index recorded a gain of 0.8 percent in the last month, which is quite good considering that the total return the index has reported so far until the end of Q3 has merely reached +1.5 percent. Fortress Macro Fund was among the gainers in September, up 1.23 percent through September 27 while returning +10 percent YTD. TT International managed just +0.14 percent in the month, with their total return up 2.4 percent. Caxton Global Investments also barely managed a +0.14 percent gain this month. London-based Pharo Macro was up 2 percent through September 20.
However, all macro hedge funds did not follow the same luck. Some big macro players lost as the Fed announced its no-taper decision, and only some gained off the surprise announcement. Hugh Hendry’s Eclectica Fund was down 2.3 percent in the last month, bringing YTD loss to -3.4 percent. Omni Macro was down 0.8 percent in the month, and has lost -3.1 percent in the year. Rubicon Global, which gained really well until May, has now lost half of those returns. Rubicon was down 1.98 percent in the month, trimming YTD gains to +12.7 percent. Paul Tudor’s global macro funds also lost in September, Tudor B.V.I Global was down 0.5 percent, while Tudor Discretionary Macro Fund lost nearly 2 percent, bringing the gain for the year to 8.19 percent.
North Asset Management’s North MaxQ Macro Fund lost 3.1 percent in September, pulling the gain down to +8.2 percent for the year. The MaxQ fund lost in short EM interest rate positions, and the bearish view of the fund was not rewarded as Fed signalled no-taper and Larry Summers withdrew his nomination for Fed chair.
Woodbine gains off of Japan, expects large inflows in equity market
Woodbine’s gains came from its long exposure in Japanese equities, one of the fund’s main positions. Nikkei and Topix were up in September after reporting four straight month of declines. The fund increased exposure in Japanese equities as volatility in Nikkei is now below average for the year. Woodbine sees improvement in data from Japan and sees more upside in investing there. The fund also points out that Japan’s largest domestic investor, the Government Pension Investment Fund, is likely to increase allocation in risky assets following the recommendations of an advisory board. This would naturally boost the Japanese stock market further and would attract more inflows from other investors, so all in all, Woodbine is very optimistic about Japan.
Since the nomination of Janet Yellen as Fed chair, yields of USTs have calmed down and are expected to stay low for some time. Similarly, in Europe, short dated interest rates are unlikely to rise as inflation remains below target. Woodbine is long both on European and U.S. short-term interest rates.