In August, the Fund had a slightly negative performance of 2.5%, after positioning itself for a QE3 announcement of then unknown timing. The Fund’s overall constructive positioning, however, was of modest proportions, with only a 62% net long exposure, i.e. quite a low “long bias” by the Fund’s historical standards. But after a modest set-back in August, this constructive positioning paid off handsomely in September, beyond the time-frame of this reporting period, with the ECB and Federal Reserve effectively announcing an unlimited global QE and sparking a “risk on” trade world-wide.
The Investment Advisor very well understands the long-term implications of unlimited global money-printing, and with no desire to “fight the Fed”, Diamond Age is positioning the Fund to profit from these long-term processes. Diamond Age will maintain a “long-biased” portfolio of securities in multiple asset classes, including equities, bonds, currencies and commodities, which stand to benefit world-wide from Russian and CIS-related activities in an increasingly globalized world. When China wants to eat and drink – give it food and water, to give just one of many examples. China, for instance, overcomes its chronic water shortages by bringing in water in
the form of massive grain imports – benefitting agro stocks in Russia, Ukraine and Kazakhstan. And when the value of money falls, buy long whatever benefits as a result, and sell short whatever will be destroyed.