The Mosaic Global Fund had a -1.26% return for the month of March.
March was the month of Central Bank focus yet again. The ECB started its quantitative easing program this month and we have seen a continued strong USD. Fed Chair Yellen removed the word patient in her latest speech and this has rendered an intensified discussion on the possibility of a rate increase during the back end of this year. Market’s seemed to disagree with the financial press and bought bonds during the month seeing a recovery taking prices back almost to the highs before the February correction.
Equity markets had a volatile month following the Central Bank talks and lost some ground during the month, the US losing more than Europe. As mentioned in our February commentary we have been following Emerging Markets (EM) with interest and saw some strong recovery from the 10th of March lows. (See ETF: EEM) We will need to see further strengths before our Trend/Momentum Filters will allocate capital, but we can see that EM’s are acting more positively than in a long time.
The Mosaic Global Fund made money in our bond positions and lost money in our stock market positions. Our Trend and Momentum Filters have continued to reduce our bond allocation and increase stock market exposure especially in developed markets. Our feeling is that the strong USD is holding the US stock market back and is therefore also putting pressure on other global stock markets that are showing signs of wanting to strengthen.
Benefits of Systematic Investing
The benefits that we have as a quantitative investment manager, relying on loads of research and price strength when making our systematic invest decision, is that we reduce the information and media noise to a minimum. As an example we can take the ongoing discussion about rate hikes or not in the US during 2015 which has lead a lot of investor’s to dramatically reduce their bond holdings. As much as we lost money during February due to the correction in US bonds markets we made money during the volatile autumn (and January). Looking back at our research we frequently see this type of activity with the strategies that we use. This results in that we often have strong performance during volatile stock market periods but when we are then seeing stock market resume their uptrends we might give back some of our bond market profits for a month or two while we gradually increase our allocations towards rising stocks again. We see this type of return flow as normal and actually something positive since we do know that over time participating in wealth creation is very much about protecting your assets during volatility stock market times, and participating in stock market, and other asset class returns, when they are in more “normal” or positive trends. This reduces the portfolio volatility dramatically while not giving up on the opportunity to make money.
Please reach out to us on this email email@example.com, or give us a call on +352 202 033 27, to find out more about the Mosaic Global Fund and how the Fund is managed with our Trend and Momentum Filters. We look forward to speaking with you soon.
To Your Investment Success!
Per-Olov Jansson & the Cardea Investment Team