TIDMDTL
RNS Number : 3871C
Dexion Trading Limited
14 March 2014
Dexion Trading Limited (the "Company")
February Net Asset Value
The net asset value of the Company's Shares as of 28 February
2014 is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
136.87 pence +0.02% -2.03%
-------------- ---------------- ----------------
In calculating the Company's Net Asset Value the Company's
Administrator will rely solely upon the valuation of GBP
denominated Permal Macro Holdings Limited ("PMH") Class A shares
provided by PMH. The Investment Adviser and third party service
providers to PMH, rely on estimates of the value of Underlying
Funds in which PMH invests, which are provided, directly or
indirectly, by the managers or administrators of those Underlying
Funds and such valuations may not be considered 'independent' or
may be subject to potential conflicts of interest. Such estimates
may be produced as at valuation dates which do not coincide with
valuation dates for PMH and may be unaudited or may be subject to
little verification or other due diligence and may not comply with
generally accepted accounting practices or other valuation
principles. The Investment Adviser may not have sufficient
information to confirm or review the completeness or accuracy of
information provided by those managers or administrators. In
addition, these entities may not provide estimates of the value of
Underlying Funds in which PMH invests on a regular or timely basis
or at all with the result that the values of such investments may
be estimated by the Investment Adviser. Both weekly estimates and
bi-monthly valuations may be based on valuations provided as of a
significantly earlier date and hence the published valuation may
differ materially from the actual value of PMH's portfolio. Other
risk factors which may be relevant to this valuation are set out in
the Company's prospectus dated 12 March 2008.
Monthly Portfolio Review
Investment Adviser Portfolio Outlook
Managers continue to hold a constructive view on the developed
markets, particularly the US, where they believe the recovery
remains intact. The recent softness in economic data is likely to
be related to the weather and, as such, is likely to prove
transient. The unusually cold weather has simply served to delay
items on the economic calendar, such as the Fed's first rate hike.
In Japan, the BoJ appears set to deploy more policy action later
this year. Specifically, the increase in consumption tax in April
is likely to result in a contraction, at which point the BoJ looks
likely to re-engage in further monetary easing. This year's
correction in Japanese equity prices has offered a compelling
re-entry point. In Europe, the economic situation continues to
improve and there is tangible evidence that countries like Italy
and Spain are becoming increasingly competitive. There has also
been a sharp narrowing of peripheral spreads. The point of acute
pessimism with regard to emerging markets appears to be abating as
the sell-off over the past year and at the start of 2014 has made
way for clearer positioning. Additionally, many emerging market
countries are set to hold elections in the coming months, after
which authorities are likely to implement more fiscally sound
reforms. As such, while many managers believe that caution towards
these markets remains warranted, others believe that compelling
opportunities on the long side will start to surface in the second
half of 2014, particularly after the elections. For the time being,
however, economic optimism resides primarily in the developed
markets due to their positive growth trajectory. In addition, the
divergence in policy paths between the major economies offers
plentiful macro trading opportunities across asset classes.
Market Overview
Global equity markets generally moved higher in February. In the
US, equity markets fell initially on weaker-than-expected
manufacturing data, but ultimately advanced on quarterly earnings
and increased corporate M&A. European equity markets advanced
on the back of stronger-than-expected Q4 2013 GDP data, with six of
the largest economies in the eurozone reporting quarterly
expansion. In Asia, equity markets moved lower on disappointing
Chinese manufacturing data, fueling concerns about global economic
growth and uncertainty in emerging markets. Despite the BoJ
extending its loan support programme to bolster bank lending,
Japanese equity markets faced sharp volatility on the back of mixed
global economic reports, ultimately finishing lower on
softer-than-expected US economic data and a stronger Japanese yen.
Believing the current backdrop to be one of self-sustaining and
synchronized economic expansion in developed economies, managers
maintain, and some have recently increased, their long exposure to
developed market equities, in particular the US, Japan and, to a
slightly lesser extent, Europe.
The JP Morgan Global Government Bond Index (Local Currency) was
up in February. Yields on 10-year bonds generally ended the month
flat, masking intra-month volatility. The notable exception was in
Japan, where yields declined steadily throughout the period. In the
US and Europe, yields rose in the first half of the month as
investors attributed the disappointing US data to the extreme
winter weather. However, continued soft data combined with
escalating political unrest in the Ukraine and Venezuela led to
safe-haven buying, reversing yields into month end. The Merrill
Lynch High Yield Master II Index edged up, while the JP Morgan
EMBI+ Index was also higher as concerns about emerging market
contagion dissipated in early February. Peripheral bond yields were
mostly unchanged, with the exception of Greek bonds, which rallied
on news that the EU was contemplating a maturity extension on loans
to Greece. In the US, managers continue to favour tactically short
exposures to US government bonds in light of the economic recovery.
In Europe, they continue to be long the euro curve and although
Draghi has been slow to implement policy changes, managers believe
he will inevitably need to adopt a more dovish stance. Certain
managers continue to be long European peripheral bonds (i.e.
Greece) given improving economic data in this region. In Japan, the
bias is to be generally short Japanese government bonds as policies
focus on re-inflation.
Commodity prices broadly climbed in February as escalating
geopolitical tensions in Ukraine fueled concern that energy and
agricultural supplies would be disrupted. Crude oil prices rose on
falling US inventories and as cold weather drained supplies of
distillate fuels. Natural gas prices were volatile, soaring for
most of the month on reports of declining stockpiles from arctic
cold weather conditions throughout the US, but finished the month
lower on the back of warmer weather forecasts and
smaller-than-expected declines in US inventories during the last
week of February. Gold prices climbed markedly on political turmoil
in Ukraine and the disappointing US economic data. Base metals were
also higher, with copper climbing on reports of record Chinese
credit growth. In agricultural commodities, US grains finished
higher on concerns over Ukraine and US export demand. Coffee prices
in particular surged in February due to severe drought conditions
in Brazil. Whilst light, exposure is generally expressed through
short gold positions.
The US dollar ended lower against most of its developed and
emerging market counterparts in February on the back of the US
economic data reports. Sterling reached a four-year high against
the US dollar as the BoE raised its growth forecasts, while
commodity currencies appreciated with commodity prices rallying
across the board, with crude oil and wheat prices buoyed by the
Ukraine crisis. The Chinese renminbi notably weakened towards
month-end, falling against the US dollar as the CBoC sought to
weaken the currency, raising questions about the health of the
Chinese economy. Long US dollar is the highest conviction trade in
the foreign exchange sector given the continued US recovery, and
the policy path being adopted by the Federal Open Market Committee
against other major central banks. To that effect, long USD dollar
against Japanese yen remains a prominent position for most of the
managers. They also typically believe that the US dollar should
appreciate against the euro and many are positioned accordingly;
however, others are waiting for firmer indications that Draghi
plans to implement accommodative measures before initiating euro
shorts. Managers hold long exposure to the US dollar against
various emerging market and commodity currencies, in particular the
Canadian dollar, given the pressures on emerging markets and the
deteriorating outlook for commodities.
Strategy Overview
Discretionary: +0.16%. Profits this month came from being long
developed market equities, although these were somewhat muted as
managers decreased risk levels following the January sell-off.
Being long European peripheral bonds also proved accretive to
portfolios. Certain emerging market focused managers generated
gains from being tactically long emerging market currencies,
believing markets were likely to favour those countries that have
taken positive policy steps to address their current account and
inflation issues (i.e. by hiking interest rates), such as Turkey
and South Africa. Profits were largely offset by losses from long
US dollar/Japanese yen positions, as well as shorts in developed
markets government bonds (UK gilts and US treasuries).
Systematic: -1.15%. During the month, trend following managers
were generally able to capture the renewed uptrend in equity
prices; however, the metals sector proved more challenging as
managers generally retained their short positions in gold, which
rallied during the month. In addition, FX resulted in losses for
some managers on the back of a reversal in commodity and emerging
market currencies after the January decline. On the non-trend
following side, currencies detracted from gains amid a bounce in
commodity currencies. Further losses came from short positions in
coffee and sugar as both markets experienced short squeezes on the
back of dry weather in Brazil.
Thematic: +1.93%. Equity prices benefited equity market neutral
managers as long positions outperformed shorts. Additional profits
were driven by long credit positions in both corporate and
non-agency RMBS. Gains were only marginally offset by shorts in
agricultural commodities.
Strategy Allocation Number of Performance by
as of 28 February managers as strategy %
% of
28 February
------------------ ------------------- ------------- -----------------
February YTD
------------------ ------------------- ------------- --------- ------
Discretionary(1) 65 14 +0.16 -1.92
------------------ ------------------- ------------- --------- ------
Thematic 11 6 +1.93 +1.11
------------------ ------------------- ------------- --------- ------
Systematic(1) 14 7 -1.15 -3.28
------------------ ------------------- ------------- --------- ------
Other(2) 2 7 - -
------------------ ------------------- ------------- --------- ------
Cash 8 - - -
------------------ ------------------- ------------- --------- ------
Total 100 33(1)
------------------ ------------------- ------------- --------- ------
(1) Discretionary and Systematic have one manager in common.
(2) Funds in liquidation
Strategy returns are in US$, net of underlying manager fees
only, and not inclusive of either Dexion Trading's or PMH's fees
and expenses.
Supplementary Information
Click on, or paste the following link into your web browser, to
view a full review of the Dexion Trading Limited portfolio.
http://www.rns-pdf.londonstockexchange.com/rns/3871C_-2014-3-14.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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