11 March 2020
The Kardinia Absolute Return Fund is well-placed to manage capital in volatile uncertain markets. The Fund has the flexibility to move exposure to the market (total long positions minus total short positions) from 75% net long to 25% net short. This allows the strategy to protect investors’ capital in periods of market falls.
We are monitoring the COVID-19 situation in live time and have been actively managing the exposure since we identified the coronavirus as a material threat to global growth in January. This active management to the Fund’s net exposure to the market has allowed the investment team to minimise (and in this case eliminate) investors’ exposure to recent market weakness.
Since late February, the Fund’s net exposure to the market has been held at very low levels including net short. To raise the net again, we are looking for signs of significant resumption of Chinese manufacturing activity, immediate monetary and fiscal stimulus, potential cures or vaccines, extreme volatility indicators and capitulation in markets (driven by passive exchange traded funds).
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