Latitude Horizon Fund


THE OBJECTIVE OF THE LATITUDE HORIZON FUND IS TO DELIVER CAPITAL APPRECIATION OVER THE LONG TERM BY HOLDING A CONCENTRATED PORTFOLIO OF STOCKS, WHILST LOWERING THE EQUITY RISK THROUGH A SELECTION OF NON-EQUITY INVESTMENTS. 

June 2018 Commentary

In the debates which rage on the world stage, Trump continues to weaponise his disdain for detail. His attempts to divide and confuse nations who historically have acted together has been a success, and time will tell if there will be any real winners. How nations choose to engage at this stage of their negotiations risks causing them to stand apart, strengthening America’s position. Logic suggests that the extreme brinksmanship surrounding trade talks will fade soon, but logic is yet another deficit which is increasing these days.

As a result of the trade negotiations, combined with some country specific risks in Latin America and Turkey, Emerging Market assets have seen sharp falls this year. The position which we initiated in January 2017 to reduce our US Dollar exposure using a basket of EM bonds, gold and EM currencies has performed well but, due to the recent breakdown in correlations, the remaining portion has now been closed.

When we initially entered the trade the US Dollar was peaking, and we sought ways to reduce our exposure to this risk. We chose the specific investments due to the asymmetric expected return profile at the time. The dollar strength, combined with the antiglobalisation rhetoric post Trump’s election led the currencies to trade as low as they had in the depths of the 2008 crisis, with our expectations of downside and upside -1% v +10%, with an underlying 5.5% carry. This was a hedge on our equity risk, which paid us a reasonable return to invest – exactly what we’re trying to achieve within our non-equity investments.

The key sell decision for our non-equity investments comes when we see sharp changes in correlations, and the position’s ‘hedge’ is no longer effective. This happened in Q2 this year and, given we aim to use non-equity investments to reduce macro exposures, we exited the entire holding.

Over the holding period the position generated a return of 1.7% annualised on a standalone basis, roughly inline with our target of generating inflation like returns on the non-equity side of the portfolio.

Reducing risk in the fund in this way allows us to focus on the long term within our stocks, which results in better decision making and stronger performance over time. The interdependent relationship between our stocks and non-equities is a critical foundation stone for our investment process, and one very suited to this volatile macro-economic environment. While we hope for a calm summer, we are positioned to protect capital in the likely event that reality is far more volatile.

Fact Sheet
Key info
Key Info
Fund Launch Date1st November 2016
Legal StructureIrish Domiciled UCITS V Fund - ICAV
RegulatorCentral Bank of Ireland
Base CurrencySterling
Regional ExposureGlobal, primarily developed markets
BenchmarkThe fund is not benchmarked
Share Classes£ - A/I IE00BDC7CZ89 / IE00BD37NY30
$ - A/I IE00BD37NZ47 / IE00BDC7JY67
€ - A/I IE00BDC7CX65 / IE00BDC7CW58
Management Fee1% per annum
Performance Fee0%
DealingDaily
AdministratorSEI Investments – Global Fund Services
CustodianSEI Investments Trustee and Custodial Services (Ireland)
Auditors PriceWaterhouseCoopers
Legal CouncilMatheson
Firm ComplianceOptima Partners
Contact DetailsAlex Robins - alex.robins@latitudeim.com 12-13 St James’s Place, London, SW1A 1NP +44 (0) 207 087 9275
Documents
Fund Reports