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Swip’s Carver underweight gilts and warns US tapering is now fully priced
by Elsa Buchanan on Sep 10, 2013 at 11:24
Over 12 months to mid-August, his £132 million fund is up 8.83% compared to three-month Libor’s 0.55% rise, according to Lipper. Over three years, the fund has returned 16.77% compared to a 2.34% rise in the benchmark.
‘2012 was strong for us, as we played the peripheral tightening in the second half of the year and had a positive view on credit markets for much of the year,’ Carver said.
He said this contributed 3% to the fund’s 7.63% return in the calendar year 2012. Performance was also boosted by interest rates and foreign exchange plays, including yen, Australian dollar and sterling shorts, which added 1.5% apiece.
Similarly this year, Carver described his Australian dollar positioning as ‘very profitable’ in May and June when markets bounced back. The fund was 10% short the Australian dollar against sterling, the Canadian dollar and the US dollar.
Conversely, after being short the yen in 2012, Carver switched the trade this year moving long the yen when markets expected the currency to continue depreciating.
‘The weird thing about Japan is that the promises in the reforms and QE are going to bolster the Japanese economy. You’ve seen very large equity inflows into Japan over the last five to six months,’ he said.
‘If the economy continues to improve, Japanese investors who are hedging their exposure will lift those hedges, strengthening the yen.’
Shorting the Mexican peso
In emerging markets, Carver recently initiated a position in Brazil, and was short the Mexican peso in May and June.
‘That was on the premise that investors’ positioning was a one-way bet in Mexico for quite some time. We anticipated the Mexican peso would suffer, which it did. That was a profitable position.’
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