USD August Market Performance

Noteworthy Developments

Global equities (MSCI ACWI Index) continued to appreciate strongly, albeit with high volatility.  The ACWI Index sharply declined by 5.4% the first week of the month before furiously rallying to end August up 2.5%.

Global Equities

Global equities increased 2.5%. US Large cap equities (S&P 500) were up 2.4%. International developed equities (MSCI EAFE Index) were up 3.3% (0.5% in local currencies) with European equities outpacing those in Japan. Emerging market equities were up 1.6% (0.4% in local currency) with Brazil (6.7%) and Taiwan (3.3%) equities performing well. Globally, value stocks (2.7%) and growth stocks (2.4%) performed relatively in line. Defensive sectors such as healthcare (5.5%) and consumer staples (5.0%) performed best while the energy sector (-0.5%) and consumer discretionary sectors (0.7%) performed worst.  US small-cap stocks (-1.5%) performed poorly as investor worries about US economic growth intensified following soft job market data.

Fixed Income

The benchmark US-Aggregate Bond index was up 1.4%, with performance driven by sharp declines in interest rates. Those rates declined by 15bps-35bps as US job market data were softer than expected. US Treasuries (65% of the benchmark) were up 1.2%, and investment-grade corporate credit (roughly 25% of the index) was up 1.4%. High-yield bonds were up 1.6%, benefitting from high coupon income and declines in interest rates. Leveraged loans were up 0.6%, with high coupon income modestly offset by widening spreads.

Alternatives

The HFRX Global Hedge Fund Index was up 0.4%, with most strategies delivering positive performance. Convertible arbitrage and credit strategies (1.1%) performed best while global/macro/trend following performed worst (-1.5%). 

Manager Comments

Alphadyne: -1.9%

Underperformance vs. HFRX Global Index (0.4%) driven by relative value bets, especially regarding US interest rates.

Linden: 1.6%:

Outperformance v s. HFRX Global Index (0.4%) driven mainly by idiosyncra tic events surrounding certain positions.

Wasatch Small Cap Value: -1.8%:

Underperformance v s. the MSCI ACWI Index (2.5% ) was driven by exposure to US Small-Cap stocks (-1.5%), which significantly underperformed large-caps due to investor worries surrounding US economic strength, as job market data was weaker than expected.