Equity indices (-27%)

The short to the equity market detracted 27% from the portfolio. Equities at these levels look extremely rich. The weakness in the Chinese market shows concerns about growth in the economy that investors are expecting to drive global economic activity, yet the authorities want growth to slow. Whilst there are signs that growth in the US is stabilizing, there is yet the improvement in employment required to generate a sustainable period of even trend growth. However, i am increasingly nervous about the equity short, particularly its magnitude. It might be a while before I am proved right on the equity position and the meantime, there could substantial further rises.

Currency (+3%)

As equity markets rallied the position in NZD/USD detracted, but was marginally more off-set by the overweight to SGD out of USD.

Bonds (-4%)

The short to gilts detracted in value

Single equities (-1%)

The short to DSG added value, but offset by the losses on shorts to Narabank, Ford and Taylor Wimpey

There are no commodity positions in the portfolio.