Quant based hedge funds have had a tough year, Woodbine Capital Advisors LLC is one such example. Although the fund was able to return 1.44 percent, net of fees, in October, the overall year to date performance has been less than brilliant with total returns of 3.01 percent. The performance of Woodbine was down in four out of ten months of 2012 so far. The maximum gain was seen in May, with returns of 3.57 percent.
Eurostoxx 50 was up 2.01 percent in last month, so the fund was profitable in its longs in European equities. Woodbine also gained from its long holdings in Spanish bonds, Brazilian interest rates, and USD vs JPY. Like other hedge funds, Woodbine lost on its long position in gold.
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
In addition to the above positions, the fund also has long positions in European interest rates and short term Spanish debt. Whenever new financial support is directed to Spain by ESM, the European equities and Spanish debts are expected to rally. The fund also expected an upswing in S&P 500 (INDEXSP:.INX) after the US presidential elections wrapped up. Brazilian interest rates are also expected to be at the low end in the coming quarters, as growth has been slow in this emerging economy. The Japanese yen is predicted to decline even further after more monetary easing is executed by the central banks. Therefore, going forward, the fund has stuck to longs in USD versus JPY.
In the monthly commentary on the market’s outlook, the fund noted that Global Manufacturing Purchasing Manager’s Index has been improving in most of the economies of Asia, which signifies that growth is being achieved despite the continued slowdown in the European market. Cyclical recovery in the US and Asia can improve the global picture of economy despite the weak signals from Europe, which were further intensified by the industrial decline seen in Germany. In view of these factors, Woodbine is increasing investments in Asian economies.