The Fund enjoyed another strong month in October, delivering a return of +2.34% after all fees and expenses. Since inception, the Fund has now returned +55.0% after all fees and expenses. This performance occurred against a more mixed backdrop for the NZ and Australian markets, which posted returns of -1.3% and +1.2% respectively.

The Fund was actually up on 8 of the 9 down-days for the 50/50 NZ/Australian index during the month. On average, long only equities fell by -0.72% on those days, while the Fund was up +0.21%. This shows how we are delivering our returns with far less volatility and no correlation to equities and gives confidence that the Fund will do its job as part of a diversified portfolio in the event of a sharp market sell-off. We have not simply hitched a ride on the bull market and will give those returns back when the market meets its inevitable fate.

We remain very cautious on markets, with valuations being ultra-extended as passive funds drive the market forward with a seemingly endless wall of buying. They will prove very vulnerable when the tide suddenly turns. Who will they sell to in the event of outflows? The massacre of the NZ gentailer stocks during October was a small reminder of just how quickly market conditions can change.

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