TIDMDTL
RNS Number : 1921M
Dexion Trading Limited
13 September 2012
Dexion Trading Limited (the 'Company')
August Net Asset Value
The net asset value of the Company's Shares as of 31 August 2012
is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
133.69 pence +0.14% -0.13%
-------------- ---------------- ----------------
In calculating the Company's Net Asset Value the Company's
Administrator will rely solely upon the valuation of GBP
denominated Permal Macro Holdings Limited ('PMH') Class A shares
provided by PMH. The Investment Adviser and third party service
providers to PMH, rely on estimates of the value of Underlying
Funds in which PMH invests, which are provided, directly or
indirectly, by the managers or administrators of those Underlying
Funds and such valuations may not be considered 'independent' or
may be subject to potential conflicts of interest. Such estimates
may be produced as at valuation dates which do not coincide with
valuation dates for PMH and may be unaudited or may be subject to
little verification or other due diligence and may not comply with
generally accepted accounting practices or other valuation
principles. The Investment Adviser may not have sufficient
information to confirm or review the completeness or accuracy of
information provided by those managers or administrators. In
addition, these entities may not provide estimates of the value of
Underlying Funds in which PMH invests on a regular or timely basis
or at all with the result that the values of such investments may
be estimated by the Investment Adviser. Both weekly estimates and
bi-monthly valuations may be based on valuations provided as of a
significantly earlier date and hence the published valuation may
differ materially from the actual value of PMH's portfolio. Other
risk factors which may be relevant to this valuation are set out in
the Company's prospectus dated 12th March 2008.
Monthly Portfolio Review
Investment Adviser Portfolio Outlook
After a relatively subdued August, September's macroeconomic
calendar will be far busier, with a number of key announcements
due. This is likely to give rise to an active and possibly volatile
trading environment. In the US, managers believe that the Fed will
implement QE3 in light of disappointing economic data, particularly
the ongoing weakness in the labour market. In Europe, ECB President
Mario Draghi's statements have been supportive of risk assets and
have temporarily removed many of the negative tail risks. Managers
generally believe that accommodative policies in these core regions
will lend support to US and European markets in the short term. It
should also provide a more beneficial landscape for the emerging
markets, although worries over a Chinese slowdown have generally
overshadowed the positive market impetus provided by accommodative
policy in the developed world. In the long term, many of the global
growth concerns remain, as well as a risk that markets may soon
start to suffer from 'policy fatigue'.
Market Overview
Wavering optimism over the potential for further monetary
easing, coupled with light volumes, drove much of the price action
during the month. Early on, comments from the Fed and the ECB
played down hopes of additional monetary accommodation but a
better-than-expected US employment report bolstered risk assets
later in the month. Angela Merkel's pledge to support the ECB's
efforts to support the euro, along with continued positive economic
reports from the US, also buoyed investor sentiment. Towards month
end, growing uncertainty over central bank action increased,
despite the release of seemingly dovish FOMC minutes. Weaker
economic data from China added to investor concerns. At month end,
Bernanke noted that the lack of sustained improvement in US
employment data was likely to warrant additional monetary easing,
comments that sharply boosted risk assets on the last trading day
of the month.
Global equities experienced some intra-month swings as investors
shifted between concerns about the health of the global economy and
expectations of further central bank action. Early in the month,
positive US economic data - including a bounce in retail sales and
an increase in industrial production - drove equity prices higher,
but the rally stalled amid fears of an economic slowdown in China,
with emerging markets suffering a more pronounced decline. Equity
positioning in the portfolio remains relatively light and is
dominated by small long exposures in the US and Europe.
Bond yields ended the month virtually unchanged despite the
intra-month volatility. Yields increased in the first half of the
month as positive economic data weakened the demand for bonds but
rallied in the latter part amid increased speculation over further
monetary easing. Peripheral European yields generally moved lower
after Mario Draghi's announcement that the ECB was prepared to step
in and buy peripheral bonds. Yields in Spain, however, continued to
widen on the back of fears that the promised emergency funds for
Spain would prove to be insufficient. In the developed world, the
portfolio's exposure is primarily focused on long positions at the
short end of the European yield curve, as managers believe ongoing
regional weakness will only lead to further monetary easing.
Managers are also tactically trading peripheral bond markets, where
spreads are likely to narrow. Emerging market managers have long
exposures to sovereigns that are likely to benefit from
accommodative monetary policies, including Mexico, Venezuela,
Brazil and South Africa.
The euro rose steadily against the US dollar in August as risk
taking increased. The US dollar depreciated against most emerging
market currencies, and those economies closely linked to Chinese
trade, including the Australian dollar and New Zealand dollar, also
saw their currencies decline. The portfolio's managers are
generally short the euro and some have also started to short the US
dollar, believing QE3 to be imminent. Long positions are dominated
by commodity currencies (which should benefit from any additional
easing) and emerging market currencies as investors search for
yield.
The natural resources sector rose in line with other risk
assets. Oil prices were up over 9% due to the resumption of risk
taking, alongside lower US inventories, tightening Iranian oil
sanctions and reduced production in the Gulf of Mexico after
Hurricane Isaac and an explosion at a major Venezuelan refinery.
Precious metals also rose during the month, with platinum notably
higher due to the well publicised issues in South Africa. Gold
prices appreciated, largely on the back of US dollar weakness.
Wheat and corn prices, which had a considerable rise over the last
two months as drought conditions persisted throughout the US
Midwest, registered losses as record-high prices reduced demand.
The portfolio's exposure in the sector remains muted, with long
positions in oil anticipating the escalating Middle East tensions,
and in gold, which is likely to benefit from further monetary
easing.
Strategy Overview
Discretionary: +0.59%. Gains were generally widespread across
the various asset classes, with the exception of foreign exchange.
Managers profited from the fixed income sector, particularly in the
eurozone, with long exposures at the front end of the euro curve
proving accretive. Tactical trading in European peripheral
sovereign bonds, where managers tried to capitalise on narrowing
spreads, also added to the returns. Additionally, relative value
trades along the UK curve proved profitable. Other positive
contributions came from being long emerging market bonds, as well
as long commodities, primarily energy and gold. Longs in broad
European and US equity indices also added to gains. Short euro
positioning, however, resulted in foreign exchange sector
losses.
Systematic: -1.24%. Both trend and non-trend followers struggled
as long-held trends reversed. Currency exposures hurt trend
followers, with the rising euro in particular leading to losses.
Non-trend followers were also impacted by currencies, particularly
those that were long the Australian dollar, as well as by fixed
income following the mid-month reversal.
Natural resources: +4.02%. The primary drivers of positive
performance during the month were gold and oil exposures.
Relative value arbitrage: +0.81%. Fundamental equity market
neutral managers profited from strong performances on the long
side, although gains were somewhat offset by losses in liquidity
arbitrage strategies.
Strategy Allocation Number of Performance by
as of 31 August managers as strategy %
% of
31 August
-------------------------- ----------------- ------------- -----------------
August YTD
-------------------------- ----------------- ------------- --------- ------
Discretionary(1) 54 21 +0.59 +1.91
-------------------------- ----------------- ------------- --------- ------
Natural resources 8 10 +4.02 +1.02
-------------------------- ----------------- ------------- --------- ------
Relative value arbitrage 6 3 +0.81 +0.60
-------------------------- ----------------- ------------- --------- ------
Systematic(1) 25 11 -1.24 +1.14
-------------------------- ----------------- ------------- --------- ------
Cash 7 - - -
-------------------------- ----------------- ------------- --------- ------
Total 100 44(1)
-------------------------- ----------------- ------------- --------- ------
(1) Discretionary and systematic have one manager in common.
Strategy returns are in US$, net of underlying manager fees
only, and not inclusive of either Dexion Trading's or PMH's fees
and expenses.
Supplementary Information
Click on, or paste the following link into your web browser, to
view a full review of the Dexion Trading Limited portfolio.
http://www.rns-pdf.londonstockexchange.com/rns/1921M_-2012-9-13.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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