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SLI Gars fund's top trades revealed
by Robert St George on Jan 17, 2014 at 08:07
Reviewing the fund’s performance in recent months, the strategist highlighted several successful Gars investments and expressed confidence in some that have not yet paid off.
Contributing to a return of 7.5% for 2013, with 1.32% coming in November and 0.84% in December, Ford first pointed to an investment backing Japanese equities over Korean equities. This was the best performing position in November and second best in December, he said.
This was primarily due to currency effects. With the effects of Abenomics well known, Ford contended that developments in Korea had been just as important.
‘Political changes in Korea mean there is a lot less political will to intervene and weaken the won,’ he argued.
Owning the major oil companies had helped in December too, Ford said, having responded well to optimism about the global economy, while offering an attractive yield of around 4%. His comments were made ahead of Shell's fourth quarter profits warning on Friday.
Gars has furthermore used this investment as a hedge against higher oil prices, and it has replaced a position in Russia that the fund had used for the same purpose.
‘If there is a flare up in the Middle East, this strategy could essentially get us out of jail.’
Detractors from performance at the end of 2013, however, included investments in global listed real estate. Ford nevertheless remains confident on property for the long-term, emphasising that two-thirds of the returns historically came from income.
A second negative was the conviction that long-dated European bond yields would rise. ‘What we’re looking for here is essentially demand at the long end of the European curve to fall,’ Ford said.
He maintained that changes to the asset allocation of Dutch pension funds would still result in lower demand for long-duration European bonds though.
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