Trend Capital’s Q1 2019 Investor Letter

Trend Capital recently released its Q1 2019 Investor Letter, a copy of which you can download below. Among other things, the fund reported a return of 1.5% for the quarter.

“Q1 2019 Performance Summary

While the performance for the quarter was modestly positive, we believe we have laid the foundation for a solid year of performance, especially since the macro back-drop is turning out more or less as anticipated.

In our last letter, while we anticipated that global growth would slow, we argued that the risk of a recession in 2019 or even 2020 was extremely low. The challenge we anticipated for markets was that global growth was slowing at the same time as central banks were winding down quantitative easing. For us the global growth story went through China. As long as the US and China resolved their trade dispute, the global economy would be okay. What has definitely surprised us is the speed with which the Fed was willing to do a dramatic U-turn on policy and the extent of the market rally.

The Fed going on hold informed us that the environment for carry was likely to be very good, especially in EM. Hence, we positioned ourselves long carry in EM via both currency and credit while hedging via buying protection in developed markets credit indices, where valuations are stretched and creditor protection has weakened.

Our positioning on the long side of our portfolio worked. While the short side of the portfolio performed its function, the sharp rally in high yield credit ending up costing us more than we would have liked. Volatility in Argentina in March also caused us to give back some of the returns from that position.”

You can download a copy of Trend Capital’s Q1 2019 Investor Letter here:

1Q 2019 – Trend Macro Commentary

You can also see the list of our 2019 Q1 investor letters and download them on this page.