MAXIN GLOBAL FUND - USD is a Long / Short Directional hedge Fund incorporated in Luxembourg. It started trading on February,22 2022 and replaces MAXIN ADVISORS' MODEL PORTFOLIO which has been trading since January 1st 2014. At MAXIN ADVISORS, we manage FULLY TRANSPARENTLY and publish the transactions on a DAILY basis and the details of the portfolio on a WEEKLY basis.
MAXIN GLOBAL FUND / MODEL PORTFOLIO
Gross Performance
+ 6.50 % Last Week
+ 8.32 % Month to Date Dec 2022
+ 95.11 % Year to Date 2022
+ 1069.21 % Since Inception Jan, 1st 2014
+ 31.41 % Per Annum CAGR 9 Years
NAV 1169.21
Performance Comparisons
MAXIN GLOBAL FUND – USD Standard Class C
Net Performance
+ 6.50 % Last Week
+ 8.18 % Month to Date Dec 2022
+ 40.63 % Since Inception 22 Feb 2022
+ 50.41 % Per Annum CAGR 9 Months
Estimated NAV USD 1406.29 140.63
Manager’s Comments
Last week was yet another good week for MAXIN GLOBAL FUND with a + 6.50 % advance while the major equity indexes were in the red by an average of -2.5 %. For December our fund is up + 8.18 %, taking its cumulative performance to + 40.6 % net since launch 9 months ago, comforting its strong advance in the 4th quarter of 2022.
As at the end of November, MAXIN GLOBAL FUND already ranked the best performing hedge fund for the second time since its launch by HFR, outperforming the 613 funds of the Global Macro, Systematic and Active trading strategies monitored by HFR, while raking in the top 1% and 3 % over 6 and 3 months respectively.
Last Week’s strong performance was fuelled by the 6th week of advance in China’s HSCEI Index which delivered another 7.1 % rise on the week as global investors and Chinese investors alike are repositioning themselves in Chinese assets, confronted by the speedy easing of COVID restrictions and strong measures taken by the new administration to boost growth and resolve the real estate crisis. Our portfolio was boosted by the strong performances of our EV exposure and Xpeng in particular, our best performer this week, and by China’s technology stocks. We have taken the rise as an opportunity to lighten up on our indexes and ETF exposure while diversifying the portfolio into individual companies, re-entering sectors such as education, Hong Kong Real estate or consumer goods. We are also increasing our weighting to the domestic market ahead of 2023.
But our performance also came from our assessment that the Year-End bear-market rally would peak earlier than initially expected and our decision to turn our allocation from long to short the US and European markets in November.
As we expected, the loss of momentum of the strong October / November rebound has now morphed into a major top across the board in the indexes and individual stocks yielding us significant profits on our short positions, the detail of which can be seen in our portfolio heat map below.
Cyclical stocks led the S&P 500 to a 3.4% drop in the week after the equity benchmark failed to hold above its average price for the past 200 days and its failed break of the downtrend. While optimism that the Fed would slow the pace of rate increases had stoked a 14% rally since mid-October, investor moods have now darkened with worries that such a move, when it does come, will be the mark of an economy laid low.
US bonds have now peaked and last week’s surprising strength in the PPI gauges is reminding investors that the battle against is not over yet. The FED and the ECB will be meeting for the last time in 2022 next week. One of our main worries ahead is negative surprises in Europe and a European Central Bank that could well be forced to raise rates more forcefully than currently expected.
In November and last week, we have closed our long positions in US Government Bonds at nice profits and have started to initiate a strategic short position in German Government bonds. European yields cannot and will not stay below 2 % with inflation levitating at close to 10 %. By the same token, we see the US dollar having bottomed for now and have been shorting the Sterling pound while going long the Chinese currency.
The steady drumbeat of warnings that the American economy is careening toward a recession is finally striking a nerve on Wall Street and long term managers may use the coming weeks to lighten up on their portfolios, sending the indexes sharply lower, either before the year is over or at the latest in January.
Investors who had tuned out warnings for the past two months — from the most inverted Treasury yield curve in four decades to declining oil prices and business survey at all time lows — are now beginning to realise that the biggest threat to risk assets is the looming downturn in growth. Signs are emerging that economic growth is buckling under the Fed’s tightening. The US services sector contracted last month. Although the labor market remains sturdy, some weakness has appeared, most recently in another rise in continuing claims for jobless benefits.
Since equities peaked on the final day of November as we expected, energy shares have led the retreat, a sector in which we had build short positions in line with our strategic short in Oil futures themselves. Oil prices declined by 11 % last week, despite all the noise about OPEC and Russia cutting production, landing us 10 % and 9 % gains respectively in our oil future and SPDR energy short positions.
Companies that are more sensitive to the economy, like financial firms and makers of consumer products, are also rolling over sharply and we booked 14 % profit on our short position in Bank of America, while we are seeing major breakdowns in most of our positions. Our shorts in TSLA, AMD and GOOGL all delivered 7 to 8 % contribution last week and all our short positions have benefitted our portfolio.
Europe is lagging behind as always but most of our short indexes that we topped up last week are rolling over now and were positive contributors. Individual stocks are still resilient and we have taken advantage of the strength to re-instate our strategic short positions the luxury segment. Bernard Arnault is back at the top of the world’s richest people, but we are shorting LVMH at current levels together with HERMES. Investors are dangerously underestimating the speed at which both revenues and profits of the sector will slow in coming two years and pinning their hopes on a massive recovery of luxury goods in China may be short-sighted.
Global positioning and trading patterns are showing a shift away from risk assets. Investors exited global stocks at the fastest pace in five months, dumping $35 billion in the last three weeks after they amassed $23 billion just a week earlier, according to EPFR data.
Signals in the breadth of moves also reinforced the fleeting nature of recent gains, mirroring conditions that presaged the end of rallies in March and August, as we predicted then. We have increased sensibly our exposure to volatility in the process.
What complicates things further is that the November’s equity rally has triggered the fastest easing in financial conditions since March 2020, according to a Goldman Sachs Group Inc. gauge, casting doubts on the Fed’s ability to switch to looser policy starting next year. Rates will stay high and even higher in 2023 and will only peak sometimes next summer. Fed policymakers appear determined to see their tightening campaign through to peak of about 5%, after being caught out by the intensity and staying power of price pressures and as we said before, we expect the ECB to surprise by its hawkishness.
In the mean time, lower economic growth and declining corporate earnings will take their toll of equity valuations in the first half of 2023.
The message was endorsed at the highest echelons of Wall Street in recent days, where bank chiefs had a uniformly grim outlook for slowing growth and corporate earnings. Even sellside analysts, predisposed to talk up assets they sell, have been sounding notably downbeat, predicting a decline in 2023. The average projection of strategists tracked by Bloomberg is for the S&P 500 to end next year at just 4,009 — their most pessimistic call since at least 1999.
Our Portfolio is clearly net short and we expect the first quarter to see a sharp decline in the major indexes with an initial target at 3700 on the SP500 and then further declines towards 3’500 and even potentially 3000 to 2800 in the summer.
We are also increasing our short positions in Cryptocurrencies.
We will hold our last MARKET WEBINAR of the Year on December 15th and our readers can register through the link below it they wish to attend.
Risk Metrics and Performance Contribution
Equity Portfolio
Portfolio Details
Asset Allocation
Transaction List
Week ending December 10 2022
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