Monthly Update: October 2016
After the surprising outcomes of the Brexit referendum and the US presidential election, it remains unclear what the effects on the economy and the markets will be. Investors did not seem to focus on a stream of mixed third quarter earnings reports, but are rather paying close attention to the uptick in inflationary signals, and the threat of potential trade barriers. The fear of a hard Brexit, exacerbated by a flash crash of the British pound, contributed to the risk-off sentiment in October.
The long term track record of Equities remains solid: the average net return is +7.2%, vs. +2% for global equity (price index).
The hedged version of Equities, Aphilion Q² - Balance, performed poorly in October. The outperformance of the Q² selection forms the backbone of the results that can be expected from Balance. The chart on the right shows a long term perspective: Balance is "live" since September 2014, but Equities already has a proven track record since 2001; and based on these figures, we can simulate the returns of Balance. The average annual outperformance of the Q² selection since the launch in 2001 is 5.2%, and that is the alpha that Balance strives to capture and transform into steady absolute returns. At the moment, Balance is performing below expectation, but we see no reason to doubt our long term targets.
More information can be found in the fund factsheets (available by clicking on the charts above), on our website for the Q² funds and on www.aphilion.com/SIF for our hedge fund for well informed investors only.