Monthly commentary BMS August 2018
Brummer Multi-Strategy (BMS) SEK gained 1.2 percent in August and has returned 2.7 percent thus far in 2018. Meanwhile, Hedge Fund Research’s HFRI Fund-of-Funds Composite Index based in USD gained 1.1 percent last month, resulting in year-to-date performance of 2.1 percent.
Intensified international trade negotiations and the dramatic weakening of the Turkish Lira dominated news last month. Global equity markets diverged, with gains in the US on the back of continued robust economic data and quarterly earnings reports, while European and Emerging markets stocks declined due to fears of contagion, as the political dispute between the US and Turkey escalated. US and European rates fell as investors moved to safe haven assets, causing primarily the US dollar to strengthen. In commodities, metals and so called soft commodities posted declines, while oil prices climbed.
Five of the eight funds in which BMS invests contributed positively to performance in August. The systematic trend-following funds Florin Court and Lynx posted exceptionally strong returns, as they capitalised on strong trends in multiple asset classes. Florin Court’s largest gains came from higher European electricity prices and a combination of long and short positions in rates. Lynx was primarily well positioned for a stronger dollar and a downturn in metals. Among the long/short equity funds, US TMT focused Black-and-White and Manticore had strong alpha contributions and posted solid gains, while Europe focused Bodenholm struggled, posting negative returns. The market neutral strategies Observatory and Nektar were also among last month’s detractors.
Ahead of September, the portfolio managers increased the allocation to the systematic trend-following strategies as well as Bodenholm, and reduced the allocation to Arete, Black-and-White and Manticore.
