Hugh Hendry’s streak of bad luck in his Eclectica hedge fund continued in July. The Eclectica Absolute Macro Fund finished July with a loss of 1.0, bringing the YTD return to -9.8%, according to a letter to investors reviewed by ValueWalk. However, the fund is currently up 0.8% in August, which if the trend continues, will be the first up month since June. Below readers can find commentary from Hugh Hendry on the month ending June.
Hugh Hendry’s CF Eclectica Performance Summary
The Fund posted a loss of -1.0% in July as a host of geopolitical concerns weighed on equity markets.
Within the Long DM component, equity risk was tactically reduced as an escalation in Ukraine towards month end prompted a sharp sell-off in markets. European index positions were the biggest drag, costing -0.1%, with additional losses coming from holdings in pharma names and European periphery equities bringing the total return for this component of the portfolio to -0.3%.
Losses were offset to some extent by gains from within the global internet strategy where Baidu Inc (ADR) (NASDAQ:BIDU) (the Chinese search engine operator) and Tencent Holdings Ltd (HKG:0700) (best known as owners of the popular WeChat messaging platform) were up 15.7% and 8.6% respectively on strong Q2 numbers.
In Japan, equity holdings in brokers and property companies gave back -0.3% despite the rise in the broader market. Our long Nikkei futures position was increased as GPIF (Government Pension Investment Fund) reform proposals (advocating a meaningful shift towards stocks) combined with better than expected corporate earnings data to incentivise equity buyers.
The Fund’s Short EM positions lost -0.3%, with the “Good vs Bad” EM FX strategy responsible for the large majority of losses. In particular, the Korean won (which we were long) sold off in anticipation of further interest rate cuts as the Central Bank adopted a more dovish tone.
Elsewhere, portfolio hedges (US 30yr Treasuries and VIX puts) made a combined +0.1%.
See full Hugh Hendry’s letter here.