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.
February 2021 Highlights:
- In February, AGAWX was down -0.88% for the month vs. the MSCI World Index, which was up 2.56%. Year-to-date, AGAWX is up 0.54% vs. the MSCI World Index which is up 1.54%.
- High beta stocks drove returns for the month with the S&P High Beta Index up 18.11%. Any time that high beta stocks outperform, it will likely be challenging for the Funds given the net 30% short in those names; therefore, with high beta stocks up seven times more than the market overall, as seen February, it was an incredibly difficult environment.
- The negative impact of this strong high beta performance was mitigated from the recently implemented ‘stay-at-home factor’ we discussed in last month’s snapshot. The portfolio avoid shorting higher beta names that also have a high sensitivity to ‘back-to-work’ dynamics and also avoid long positions in names that have high sensitivity to ‘stay-at-home’ dynamics.
- For the month of February, those ‘back-to-work’ names surged while the ‘stay-at-home’ names underperformed. While the high beta environment created significant headwinds that impacted performance for the month, the active quantitative approach that the Funds take helped mitigate some of the downside and serves as an example of how that approach can be additive over time.
The chart below helps explain more on how this ‘stay-at-home’ factor has looked since November. The blue series represents the most sensitive ‘back-to-work’ names (they have a negative stay-at-home beta), and the orange series represents the most sensitive ‘stay-at-home’ names (they have a positive stay-at-home beta). You can see the significant outperformance from those ‘back-to-work’ names since the vaccine was announced. Limiting our exposure to those high beta names, that would typically be strong short candidates, has helped avoid excessive drag in the portfolios.