In an effort to keep you updated on the 361 Global Long/Short Equity Fund, below are some highlights for the month – mainly to provide context around the Fund’s recent monthly performance.
October 2019 Highlights:
- AGAWX was up 0.00% versus the MSCI World Index which was up 2.54% in October.
- Our net 70% position detracted for the month, but the spread between low and high beta stocks was the larger headwind as the highest beta stocks outperformed the lowest beta stocks by 402 basis points (the lowest beta quintile was up 74 basis points while the highest quintile was up 476 basis points significantly outperforming the market broadly). Because the portfolio is short around 30% of the portfolio in the higher beta stocks, anytime the spread is this wide it creates a headwind for our approach.
- This relationship has persisted YTD and over the trailing 3 years which has been difficult for our approach. However, we remain confident in this positioning over time due to the performance of higher beta stocks in difficult markets as this chart outlines. Our process aims to win over time by losing less in down markets and we believe that shorting high beta stocks is an efficient way of achieving that, even when it leads to shorter term underperformance.