North Asset Management’s hedge funds were up in May, as macro news took a turn for the better in the period. The MaxQ Macro fund took in a gain of 2.5% whereas the Emerging Markets Fund was up by 0.67% in last month, according to monthly updates seen by ValueWalk.
The flagship MaxQ Macro fund rose after three consecutive months of negative returns and is now up 0.32% for the year. On the other hand, the EM fund has been doing well all along, and is now up 11.3% YTD.
MaxQ Macro fund makes the right call in eurozone
Gains were made on back of healthier returns that came out of the U.S and Europe and a fulfillment of the fund’s expectations. In their market commentary, the fund managers said that the future will be characterized by more differentiated economic cycles in each country. The managers said that momentum has peaked in the European region which was clear in the form of a weakening euro. MaxQ Macro was up in its shorts in euro and rate positions in China and Hungary. The hedge fund has long breakeven inflation position in 5 and 10 year U.S rate curve and has longs in USD against a basket of currencies including the euro.
Positioning in emerging markets
Regarding the euro zone, North Asset Management believes that monetary easing, in the style of U.S asset repurchase program, would be able to break away the economy from its extended run of deflation. The fund said that ECB will not change the main interest rate for some time now and further change in policy will be no sooner than the end of this year.
The hedge fund increased its long position in Italian and Spanish government bonds versus French bonds and bought German sovereign bonds against swaps in May.
In emerging markets, the fund was up in its longs in Russian government bonds and equity options. The North EM fund closed its short exposure in Ukraine bonds over the last month. The fund has longs in Russian ruble, Indian rupee, Turkish lira and Brazilian real and shorts in Korean won.