Hugh Hendry: No emerging market exposure, Dollar could rise from here

“Some of the strongest deflationary forces will be felt in Europe, so we have the biggest overweight there in government bonds. The rest of the world is overweight emerging markets, but we have nothing. The rest of the world is terrified of the dollar. We are trying to create some positive dollar exposure. If risk aversion returns, the dollar will rise and we will make money. If it doesn’t happen, we won’t lose any,” he says.


“If you add up our gross positions, we won’t be fully invested,” he adds. “We are not taking lots of risk.”

Full article:

http://www.fundstrategy.co.uk/manager-focus-hugh-hendry/1003880.article

 

If risk aversion doesn't return, you won't lose money? Sure you won't. What happens if flight from dollar returns, then what smart guy?

 

Gotta love the guy, good analysis he brings. But I really don't like these contrarian investors, any moment now! Dollar will go up! Ok, it hasn't.

How big of a drawdown do these people have while waiting for the trends to reverse?

 

He claims in other articles that his fund has lost little or nothing this year.

I am not sure that this article has a completely accurate summary of Hendry's portfolio.

 

Exposure to currency moves probably represents a nil to very small % of Hendry's portfolio.

He's been clear all year - he's long long-term gov't bonds, he's long cheap options on short term interest rates staying low for a couple of years, he's long sovereign and corporate credit risk via CDS.

I believe his main fund is off 3% for the year after being up 30% plus last year.

 

His views are clear but I was making the point that his portfolio has only very modest exposure to some of them. In some cases under 100 basis points (as per his quarterly reports). He has been almost flat in many respects.

 

Hendry could be one of those 'cult managers' where even if his fund loses money (but not too much) his investors still love him.

It's possible, I've seen it before.

Having said all of that I like him and how he approaches the markets A LOT,

 

Year to date: -4.2% in the Global Macro fund, through Nov. 30.

Allocation % of NAV
Bond +77.4
Commodity +0.7
Currency +13.8
Equity +3.8
Total +95.7