Verde April 2016 Commentary: Risks From China Are BackVW Staff
Verde Asset Management commentary for the month ended April 30, 2016.
The fund performed well in April with fixed income positions, and also in the book of coins, while the share of stocks had small losses. Note we used google translate from Portuguese – unfortunately what is considered many to be the best hedge fund in Brazil does not send letters to their investors in English.
The results mainly reflected the vision and the current positioning of the fund in relation to classes of Brazilian assets: (i) we see plenty of room for real interest rates continue to fall, expressing this through a great position in NTN-Bs; (Ii) we believe that the stock market reflects an exaggeration of optimism for the new government, which does not justify allocation and therefore have a small short position; (Iii) find that the exchange rate should be stable within a small band of fluctuation, with the Central Bank on the one hand undoing swaps, and the other the dollar – at least temporarily – without uptrend before all currencies. Given this view, the fund now has a short position in dollar against the Real, in order to benefit from loading, and as a way to offset the short position on the stock exchange and also the great position in dollar against the Renminbi.
China even came up again recently as a source of concerns. The government decided late last year to inject another dose of crediting stimulus in the economy, and encourage the purchase of real estate. Part of the injected liquidity has been directed at speculation in commodities, generating some curious phenomena that remind us the bubble of actions that China has ballooned in the first half of 2015. We are attentive to the development of the situation there, we see a growing risk of the picture Chinese economic deterioration in important ways again.
Breakdown – Verde Fund Results
Multimarket strategy flagship launched in 1997, is one of the largest and oldest Brazilian hedge funds. It operates in the Brazilian and international stock market, fixed income and currencies under the management of Luis Stuhlberger.
Fund for the general public, subject to the minimum values of initial application, permanence and constant movement in the prospectus.