Stock prices remain high yet macro risks are rising. Here's my thoughts and commentary on portfolio positioning.
Memo to: Vega Capital clients
From: Scott Shuttleworth
Subject: The Vega Fund monthly performance +1.2%
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Over July the fund generated a 1.2 per cent return which brings us to 7.0 per cent cumulatively since inception. Trading conditions were again mild but we’re still seeing ample opportunities for capital growth. Our active risk positions generated a 4.35 per cent return with our hedging positions detracting the balance.
As I've discussed several times on the blog and most recently in Livewire, I continue to see that tariffs are the biggest risk posed to the world economy at this time. Disrupting global trade flows with has historically been a poor way to promote economic growth – it usually results in the opposite occurring.
Many companies are already reporting supply chain issues despite most of the considered tariffs only being threats. I remain concerned about the macroeconomic impacts which could ensue should President Trump continue to follow through with this policy.
Over the month, we became underweight options over the NASDAQ as we realised some profitable positions which were established back in April and May when technology stocks were under pressure.
Concerns over tariffs drove mis-pricing amongst options over the S&P500 and Dow Jones Industrial Average indices. As such, our algorithm has moved capital into these areas.
Our macroeconomic indicators are notably beginning to sour. It doesn’t appear quite time to go short yet...but we’re getting closer. Unforeseen events could push us back towards a more confident bullish stance, but only time will tell.
This will be the last time we provide an update on performance from the founder’s capital account. Since the Vega Fund is now open to investors, I think it’s likely that talking about two accounts will create confusion. From here on, I’ll post our monthly investor reports on the blog in place of these updates.
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