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Ashburton Replica Dollar Cash & Fixed Income Fund - News
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Ashburton Replica Dollar Cash & Fixed Income Fund
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Fund
News
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Ashburton Replica $ Cash & Fix Inc comment -Jun 04
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Wednesday, 1 September 2004
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Fund Manager Comment
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| The strong US jobs data announced in early April set the scene for a dreadful quarter for bonds, with the US bond market experiencing one of its biggest ever quarter-on-quarter declines. Accelerating inflation added to the gathering gloom on bonds, with interest rates' expectations deteriorating dramatically during the quarter. Back in March, interest rates were widely expected to remain flat for several months. Now interest rates are expected to rise considerably. Indeed, we have already seen the first step in that direction with the Federal Reserve raising their benchmark interest rate by 0.25% to 1.25% on 30 June. In the currency markets, the dollar initially drew some solace from expectations of higher interest rates but it was not to last. By the end of the quarter, it was already heading lower again as investors' focus returned to the large current account deficit.
During April, the fund manager's increased the funds exposure to bonds, with particular emphasis on the United States. There were several changes to currency strategy: the fund manager's took profits on the Norwegian krona and half the funds yen position (subsequently reinstated at lower levels); in June, the fund manager's switched all of the funds Swedish krona position into pounds and introduced exposure to the Australian and Singapore dollars.
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Ashburton Replica $ Cash & Fix Inc comment -Mar 04
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Wednesday, 19 May 2004
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Fund Manager Comment
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| The bond markets remained buoyant from the start of the year - particularly in the US where bond yields continued to fall throughout the quarter. This was due to largely weaker than expected non-farm payroll figures for both January and February and soothing words from the Federal Reserve. Although the FOMC were particularly upbeat about growth in the US, they said that inflation would remain low and that they could therefore be patient about raising interest rates. This consequently caused the US dollar to decline and bond prices to rally. However, the US dollar then recovered strongly towards the end of February and into March, as massive intervention by the Bank of Japan brought about a recovery in the US dollar versus the yen - ultimately forcing the US dollar to strengthen versus the pound and the euro.
We took advantage of the New Year bond rally to significantly reduce our exposure to bonds during the last quarter and on the currency front, our main strategy change was a 20% weighting in yen.
The Fund increased by 1.8% over the quarter. |
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Ashburton Replica $ Cash & Fix Inc comment -Dec 03
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Tuesday, 10 February 2004
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Fund Manager Comment
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| Bond markets were remarkably stable during the fourth quarter given that all the economic news was generally good and beat expectations. Nowhere was this more apparent than in America, where the economy was announced as having grown at an annualised rate of 8.2% in the third quarter.
Interest rate hikes in both Britain and Australia reminded everyone of the fact that the world is entering the tightening phase of the cycle. Despite this bevy of bad news, bond prices only registered minor losses on the quarter. Their resilience was due partly to the oversold condition developed during the preceding sell-off and partly to the massive purchases of US bonds undertaken by Asian central banks as part of their currency management activities.
Bond weightings were raised to 50% during the quarter in anticipation of a short-term recovery. Profits were taken on some of the funds European currency positions and US dollar weightings were raised as the year came to a close. The Cash & Fixed Income Funds were mixed on the quarter. The fund increased by 20% over the quarter.
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Ashburton Replica $ Cash & Fix Inc comment -Sep 03
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Friday, 14 November 2003
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Fund Manager Comment
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| The position of bond markets at the end of the third quarter is little different to the levels recorded at the half-year stage, however, this seemingly stable picture belies the major volatility bonds experienced over the summer months. Yields continued to rise throughout July and August on growing evidence of a sustainable economic recovery, with US 10-ear yields briefly touching 4.59% in early September. However, the subsequent bond rally was almost as pronounced, as mixed economic data and fears of a jobless recovery in the United States fuelled the reversal.
Another major feature over the period was the changing fortunes of the US dollar. As equity markets and the economy improved, the US dollar rose almost 7% against the euro, before plunging 8% in September, as worries over the ballooning current account deficit and the US Treasury abandonment of its 'strong US dollar policy' took hold. The decline against the yen was more gradual until the G7 meeting in Dubai. Comments concerning central banks taking a more market-driven approach were interpreted as reducing the scope of the bank of Japan to manipulate their exchange rate by selling yen and instigated the US dollar's sharp fall against the Japanese currency.
The Fixed Income Funds all performed strongly over the quarter. This fund rose by 1.5% over the quarter.
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Ashburton Replica $ Cash & Fix Inc comment -Jun 03
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Friday, 15 August 2003
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Fund Manager Comment
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| In May, Alan Greenspan's comments that he was concerned about the outlook for the American economy set the bond market alight. Although the word 'deflation' was never mentioned, the market read between the lines and the US long bond surged to levels not seen for fifty years. It had also been in Alan Greenspan's interest to 'talk-up' bonds, allowing US consumers to refinance their mortgages at record low levels, increasing their disposable income and shoring up the economy. As a result, the US bond market was driven to artificially high levels.
Towards the end of the quarter we saw some of this hear coming out of the market, with yields in all major markets rising sharply. This rise has coincided with a recovery in the US dollar, which at one stage dropped to 1.19 against the euro. It is perhaps too early to say that the massive monetary and fiscal stimulus has worked. It does however appear that the low in long bond yields of 4.17% in mid June may mark a major turning point.
All of the Fixed Income Funds generated a positive return over the quarter. The fund increased by 1.9% over the month.
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Ashburton Replica $ Cash & Fix Inc comment -Mar 03
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Wednesday, 28 May 2003
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Fund Manager Comment
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| Government bonds showed positive returns during the quarter as they were seen as a natural safe haven for investors who were in no mood to dabble in equities whilst America was on a war footing with Iraq. As international tensions grew in the weeks prior to the start of the war US 10-year benchmark yields briefly dipped through their October lows before giving back much of this performance as the conflict began.
The US dollar continued to suffer, declining 3.8% against the euro over the period. This was partly due to war concerns but the ballooning US budget and trade deficits were also a contributing factor. The UK Monetary Policy Committee took the market completely by surprise in reducing the base rate to 3.75%. The European Central Bank cut its equivalent rate to 2.5% but given the painfully slow rate of growth with the Eurozone, especially Germany, further cuts or a reduction in the value tot he euro seem necessary.
Positive returns were generated by all the fixed income services over the first quarter. The fund increased by 1.8% over the month.
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Ashburton Replica $ Cash & Fix Inc comment -Jan 03
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Tuesday, 25 February 2003
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Fund Manager Comment
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| Many of the themes that dominated fixed interest markets during the second half of 2002 continued into January. Sharp declines in global equity markets, the US dollar in secular decline, weak economic data and the constant fears over war with Iraq. This fear seems more prescient than ever following president Bush's 'State of the Union' speech to Congress, which provided the clearest sign yet that the Administration's patience with Saddam Hussein has just about run out.
Despite the fact that war looks now to be more likely than ever before, US government bonds have actually fallen over the month. International investors seem nervous of the US dollar, given its continued decline against the euro, and as a result have ensured that European government bonds have outpaced their US counterparts.
The Fixed Income funds were able to secure a profit on their 10% weighting in the Australian dollar, which was introduced last summer. This exposure has been switched into US dollars for Ashburton's sterling based clients, as the dollar remains over-sold in the short-term.
The fund increased by 0.8% over the month.
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Ashburton Replica $ Cash & Fix Inc comment -Dec 02
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Friday, 14 February 2003
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Fund Manager Comment
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| The economic picture didn't become any clearer in the 4th quarter, as some good corporate earnings figures had to be judged next to poor retail sales and consumer confidence numbers. The action of both the Federal Reserve and the ECB in cutting interest rates by 50 basis points is evidence of the continued slowdown. However, the Bank of England failed to join the party, citing the stellar rise in house prices and an uptick in inflation for keeping rates on hold for the 14th consecutive month. The US economy's lack of progress also led to the resignations of Treasury Secretary O'Neil and key economic advisor Lindsay.
The drop in the value of the US dollar and the continued rise in US government bonds have mirrored America's woes. The US dollar lost 6.3% against the euro over the quarter, as the ballooning trade deficit and the imminent war in Iraq continued to hit investor sentiment. US bonds have also outpaced their European and Japanese equivalents, ensuring that 2002 was the best performing year for US government debt since 1995.
All of the fixed interest funds registered a positive return over the quarter. The fund increased by 1.3%.
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Ashburton Replica $ Cash & Fix Inc comment -Oct 02
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Monday, 18 November 2002
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Fund Manager Comment
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| Bonds have been inversely correlated with equities for most of this year, so with equities finally rallying, It was wholly predictable that bonds would give up some of their gains of the past few months. The general feeling was that bonds had become over-bought and a shift back into equities has been made by a number of fund managers.
However, the economic picture remains mixed, with good corporate earning figures being balanced by poor retail sales and consumer confidence numbers. All eyes will now be focused on the Federal Reserve's Interest rate decision in November, with a 25 basis point reduction already factored into the markets.
Bond weightings were raised following the mid-month sell-off. A 30% weighting in inflation-linked bonds was introduced (20% Europe and 10% USA), which was partly funded through the sale of Swedish inflation-linked bonds. At the month-end, the European fixed income weighting was halved to 10%.
Despite the sharp fall in bond markets, all the fixed interest funds registered gains in October, with the fund up 0.2% on the month.
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Ashburton Replica $ Cash & Fix Inc comment -Sep 02
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Tuesday, 12 November 2002
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Fund Manager Comment
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| The ongoing threat of war with Iraq, weak economic data and failing equity markets continued to drive bond prices higher in the third quarter. The US 10-year yield dipped to 3.57%, its lowest level since the late 50's. The Japanese 10-year yield briefly touched a new 3-year low; European bond yields fell just short of doing the same.
European bonds failed to keep pace with US bonds, clear winners of the quarter, despite a disastrous showing by the region's equity markets, Japanese bonds lagged badly, due largely to a sharp sell-off in the second half of September. This correction was triggered by the Bank of Japan's decision to purchase equities directly from the banks, which gave rise to concerns that they would reduce their purchases of government bonds.
A degree of calm descended on the currency markets, following the significant losses registered by the dollar in the second quarter. The pound was the strongest major currency of choice, with Investors drawn by the solid fundamentals and relative stability of the UK economy.
The fund rose marginally on the quarter - up by 0.8%.
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Ashburton Replica Dollar Cash & F Income May 02
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Wednesday, 26 June 2002
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Fund Manager Comment
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| Government bond markets were mixed in May, with the US and Japan marginally higher and a modest decline in European markets. At times of economic turmoil, government bonds are seen as a safe-haven. However, a record $27 billion Treasury auction of two year notes in the US, and the spectre of inflation, has led investors to funnel monies into commodities, with gold prices reaching levels not seen since October ’99.
For the second consecutive month, the dollar weakened across a broad range of currencies, as continued worries about the validity of corporate earnings continues to spook a market already nervous in light of terrorist threats and international conflicts. In the medium term, an increased US government funding requirement is likely to push yields higher, however, it seems likely that bonds will remain range-bound until we see a decisive move in equity markets.
A number of strategy changes have been made during the past month. The two-year Canadian bonds which were purchased in April, have been sold, locking in a profit. Further profits were crystallised by the reduction of our exposure to the euro and the removal of the krona exposure. Renewed opportunities to take currency exposure will be actively monitored.
During the month, Replica Sterling Cash & Fixed Income was up 1.26%, Replica Dollar Cash and Fixed Income also posted a rise of 1.44%. Global Sterling and Dollar Fixed Income were up 1.30% and 1.41% respectively. |
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