The two focal points for markets this year, central banks and oil, certainly took centre stage during September 2016. Led by the actions of the Bank of Japan, the former catalyzed the largest volatility spike in months while chat from OPEC last week enabled Canadian stocks to end the month on a positive note. Each of the two Forge First funds generated positive net returns for September...
August represents the start of our fifth year in business. I’m proud that the Forge First team has been able to deliver industry leading risk-adjusted returns since inception. To our unitholders - thank you for your trust and support over the last four years. Moving forward, our value proposition continues to be that of helping investors to protect assets, diversify their portfolios and generate a competitive rate of return...
There were seven record highs for the S&P 500 during July, a month that saw US Treasury 10-year yields close at 1.46% (vs. 2.25% at December 31, 2015 and 1.47% a month ago), the VIX at 11.97 (vs. its month earlier level of 26.72) and, since July 8th, cyclical assets outperforming defensives. Markets don’t seem to have a care in the world; each day investors succumb to the allure of TINA (“there is no alternative” to stocks). Not even oil’s threat to break its 200 day moving average (at $41.20) to the downside has interrupted the music. During the month, all North American equity indices generated solid returns, with former “FANG” stocks enabling NASDAQ to post the best returns. Both of our funds generated profits during July and marked their four year track record...
Entering 2016, I’d been of the view the coming year would present increasing turbulence that would make it more challenging to balance the imperative of preserving capital with meeting the natural expectations of investors to make money. That has certainly turned out to be the case.
Specifically, each of the two funds entered 2016 with a more conservative positioning driven by:
1. Various macro uncertainties
2. The generous valuation afforded equity markets
3. Our belief that flat was likely the “new up” for equity indices this year
Post Brexit events and ensuing volatility have further solidified my view that the funds continue to maintain a more conservative positioning. However, we are cognizant that the Brexit decision requires us to examine our “road map” and make appropriate changes as it relates to sectors and securities. I provide more details on our 2H 2016 road map later in the commentary...