Key Points
Data as at 31 March 2009
Q1 turned out to be a case of taking one step forward and two steps back. We started the year strongly with a 7.7% return in January which was driven by effective shorting in US banks and US and European cyclicals. This was more than undone, during the violent rally in March, where marginally less negative economic newsflow, especially from China, coupled with intensive action by the US authorities (potential suspension of mark-to-market accounting, stepping up quantitative easing, the Geithner plan for the disposal of toxic assets) lifted market participants’ spirits.
SmartGARP™ tends to struggle during short-term reversals, when the biggest recent laggards become the leaders and vice versa, and this most recent reversal was no exception.
Whilst it is understandable that a slowdown in the rate of decline of economic activity be greeted with cheers by financial markets, it should be noted that financial conditions remain tight, household net wealth continues to slide and the rise in global unemployment is still gathering momentum. Consequently the fund remains skewed towards companies in the less economically sensitive parts of the market (net long in Utilities and Telecoms, net short Industrials and Tech) and more generally net long companies with little or no debt on their balance sheets and net short highly geared ones.
By contrast, we have closed out our net short in the Banks sector and have moved to being slightly net long. This was triggered by the aforementioned policy initiatives which took place against a backdrop of extremely negative sentiment towards the sector coupled with bank shares trading on substantial discounts to book value (see chart below).
Annual
Report and Accounts (as at 31/12/08)- Interim
Report and Accounts (as at 30/06/08)
Chart 1 – Net Sector Position: Banks
Source: Factset
Key Facts
| Type | Open-ended, Cayman incoporated, Dublin listed, Global equity market neutral |
|---|---|
| Launch | July 2006 |
| Base Currency | €/US$/£ (depending on share class) |
| General Information | Monthly subscription (with 2 days notice) and redemption (with 10 days notice) |
| Share Class | A | B | C |
|---|---|---|---|
| Denominated in: | US$ | Euro € | £ |
| Liquidity: | Monthly | Monthly | Monthly |
| Listing: | Dublin | Dublin | Dublin |
| Minimum Investment: | US $100,000 | € equivalent of US $100,000 | £ equivalent of US $100,000 |
| Management Fee: | 1.5% p.a. | 1.5% p.a. | 1.5% p.a. |
| Incentive Fee: | 20% of absolute performance with high water mark and equalisation | 20% of absolute performance with high water mark and equalisation | 20% of absolute performance with high water mark and equalisation |
Data as at 31 March 2009
NAV |
% 3 Months |
% 1 Year |
|
| $ | 71.1 |
-3.3 |
-39.2 |
| € | 67.3 |
-4.5 |
-40.9 |
| £ | 70.1 |
-4.6 |
-41.1 |
Chart 2: Artemis Global Hedge Fund NAV ($)
Source: Datastream
Performance
| US$ Nav | 71.1, down 3.3% |
|---|---|
| € Nav | 67.3, down 4.5% |
| £ Nav | 70.1, down 4.6 % |
| Funds Under Strategy | $92m |
| Net Exposure | 10% |
| Gross Long | 112% |
| Gross Short | -102% |
| Gross Exposure | 213% |
| Annualised Return | -11.9% |
| Sharpe Ratio | -0.9 |
| Sortino Ratio | -0.9 |
Source: Internal. Period for Fund performance: 1 July 2006 - 31 March 2009. Past performance is not a guide to future performance.
Historical Performance - US Dollar Class
| Jan | Feb | Mar | Apr | May | June | July | Aug | Sept | Oct | Nov | Dec | YTD | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | -0.7 | -4.8 | -1.3 | 1.4 | 1.6 | 2.3 | -1.7% | ||||||
| 2007 | 1.0 | -1.6 | 3.9 | 4.5 | 2.0 | 0.9 | 6.8 | -2.2 | 3.3 | 1.8 | -0.8 | 1.7 | 23.1% |
| 2008 | -4.9 | 2.4 | -0.6 | -2.2 | 3.0 | 6.5 | -9.2 | -17.2 | -16.1 | -0.5 | -2.6 | -4.2 | -39.2% |
| 2009 | 7.7 | -3.1 | -7.4 | -3.3% |
This document has been issued by Artemis Investment Management Ltd, which is authorised and regulated by the Financial Services Authority. It does not constitute an offer, invitation or solicitation to subscribe for shares which may only be subscribed pursuant to and on the terms of the offering memorandum published by Artemis Global Hedge Fund Ltd (the 'Fund'). The Fund is an unregulated collective investment scheme the promotion of which in the UK is restricted by Section 238 of the Financial Services and Markets Act 2000. Accordingly, the Fund may only be sold to institutional and other investors who have experience of alternative, unregulated investments such as hedge funds. It is not generally considered suitable for private investors.
The value of investments, as well as the income from them, may fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. The Fund's anticipated use of borrowing, leverage and derivative instruments carries a higher risk of loss where relatively small price movements in these instruments may result in substantial loss to the Fund.
