21 Jul 2021 - Performance Report: Longlead Pan-Asian Absolute Return Fund By: Australian Fund Monitors
21 July 2021
Longlead Capital Partners
Longlead Pan-Asian Absolute Return Fund
Latest Return Date
Latest 6 Months
Latest 12 Months
Latest 24 Months (pa)
Annualised Since Inception
01 December 2020
The Fund will invest substantially all of its assets, to the extent not retained in cash or cash equivalents, in Class G Participating Shares of the Longlead Absolute Return Feeder Fund Ltd, an exempted company incorporated with limited liability in the Cayman Islands, which in turn invests substantially all of its assets in Longlead Absolute Return Master Fund Ltd, an exempted company incorporated with limited liability in the Cayman Islands, which predominantly deploys a long/short investment strategy based on fundamental, bottom up stock selection procedures and employs risk management techniques designed to manage portfolio risk.
The Longlead Pan-Asian Absolute Return Fund experienced a tougher June quarter with a loss of -6.75%. This performance was recorded against a mixed market backdrop in Asia. While many regional equity markets recorded positive performance in aggregate over the quarter, the journey throughout was punctuated by several sharp reversals, the most significant of which was the steep fall in the Taiwan market in May in response to a surprise Covid outbreak that Longlead discussed last month.
Longlead believe peak global economic growth has likely passed in the second quarter. Their view is that a number of key macroeconomic variables are currently signalling a mid-cycle slowdown. Bond yields and inflation expectations are falling and some early cycle commodities that led the reflation trend late last year such as lumber, copper, plastic resins and soft commodities are now reversing. They noted current economic activity however remains strong, supported by global monetary and fiscal stimulus, and consequently a sharp slowdown presents as unlikely.
For the Fund, this late recovery was not enough to offset the impact of the decline in Taiwan in May, and the Fund accordingly experienced losses across the quarter in the Technology sector as well as non-sector hedges, partially offset by gains in Consumer Discretionary positions. Across countries in the quarter, the Fund saw a drawdown from positions in China, the United States, and Taiwan, with offsetting gains in both Hong Kong and Korea.