361 Global Long/Short Equity Fund
January tends to be a month full of excitement as the upcoming year brings opportunity—including a fresh start on New Year’s resolutions, and perhaps for some, the thought that winter may be half way over. The start of 2017 didn’t disappoint, with major changes in the U.S. political system, continued negotiations around Britain’s exit of the E.U. and the beginning of fourth quarter earnings season. Global equity markets fared well during the month, illustrated by the performance of the MSCI World Index which returned 2.41%. The 361 Global Long/Short Equity Fund performed in lock-step, generating 2.40%.
Dispersion between higher beta and lower beta stocks normalized somewhat from the second half of 2016, although the reward for risk remained as the highest beta stocks moved up 2.68% for the month. The lowest beta stocks also moved higher to the tune of 1.28%. Interestingly, moderate beta names were among the best performers for the month.
While the overarching beta profile of the market wasn’t necessarily favorable, it did create positive absolute performance for the month with the factor momentum model (i.e., the Alpha Model) performing well. This came primarily from outperformance of stocks with high expected returns—the largest net long exposure within the strategy. At the sector level, a sizeable overweight to Healthcare and a net short exposure to Energy proved fruitful. Overall, we are pleased with the performance of the Fund for the month in what was a more normalized environment.
Additionally, we are thrilled that the Fund reached its three-year milestone in January 2017, but even more satisfied with our track record which places us in the top 10 of long/short equity funds since inception. We look forward to the opportunities the year ahead may bring.