Investor Update | August 2024
- Yield curve inversions have historically been a reliable predictor of recessions, forecasting 11 out of the last 10 downturns. The exception to this trend occurred during the tenure of William McChesney Martin as Federal Reserve Chairman. With the 10-year to 2-year Treasury yield moving back into positive territory after nearly two years of inversion, we anticipate a potential recession onset. The critical question remains: Can Jerome Powell replicate Martin's success in averting a recession?
- We believe Chinese stocks are significantly undervalued at current levels. As a result, we have increased our exposure to large-cap Chinese companies.
- Gold Allocation: Gold remains our largest allocation, reflecting our cautious stance given the current U.S. fiscal position and the upcoming elections’ uncertainties.
- Berkshire Hathaway Investment: Berkshire Hathaway, our second-largest holding, has recently achieved a significant milestone by joining the trillion-dollar market capitalization club.
- Uranium miners continue to tread water although newsflow continues to be positive for the entire sector.
Performance Since Inception (%)
Investment Objective
Capital appreciation via investments in a combination of Equity, Fixed income, Commodities and other thematic cross country asset classes
- Global Asset Allocation fund
- Absolute return strategy
- Focus on global liquidity flows
- Top-down/Macro driven strategy
- US listed ETFs/ETNs/Stocks
- Low volatility using cash opportunistically
Benchmark Construction
Benchmark is a blend of Vanguard total world stock Index ETF (VT) – 34%, Vanguard total bond market ETF (BND) – 33% & VanEck Inflation Allocation ETF (RAAX) – 33%. ETFs are chosen for the benchmark to reflect the diversified nature of the underlying portfolio. Peers in the space typically use a 60:40 combination of MSCI World stock Index and Bloomberg global bond Index as benchmark.
The reason for including real asset as a part of benchmark – As early sings of multi polar currency world emerges, the efficiency of supply chains will be challenged pushing the cost of procurement upwards. As developed economies struggle through the massive debt burden creating an overhang on fiscal & monetary policies; real asset owners like commodity producers, efficient commodity procurers may emerge as winners. Inclusion of real assets in the Benchmark has increased the challenge for the fund as hard commodities act as inflation hedge.
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