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Alternative Market Briefing

The Big Picture: Hugh Hendry out of long dollar and long Treasury positions

Tuesday, June 30, 2015

amb
Hugh Hendry
Benedicte Gravrand, Opalesque Geneva:

Hugh Hendry, founder and CIO of Eclectica Asset Management, has gained much from a bet on the dollar rising in the last year or so, but he has decided to get out of that position. To him, the global economy is gearing towards more income equality and growth, and " the period of currency adjustment is likely complete."

According to Hendry, the global economy in the long run tends to have excess returns fluctuating among different parties, and this phenomenon correlates with cycles of global debt.

"Each wave seems to take around 40 years, with 10 years of trauma followed by 30 years of joy before the opposite extreme is reached once more," he explains in a recent investor note for the Eclectica Fund, co-written with Tom Roderick and George Lee (head of research), titled "Ten year bond has second thoughts."

Out of the long dollar In this note, he restates his belief the we are at a structural turning point in terms of global interest rates, and his decision to remove the fund’s long dollar and long Treasury positions.

"Our triple play strategy proved successful from last August to the end of March," he notes. "But now, after so many years, we favour non-US equities as our largest risk allocation."

Interest rates were set too high The present risk alignment rests on an aspect of the last thirty years that is largely neglected by the investment community, he says, and which might point to t......................

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