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Bailey McCann, Opalesque New York:

UK-based Old Park Capital is out with an investor letter citing recent improvement in the performance of their Managed Futures program, noting that the uptick in volatility is likely to be beneficial to the strategy going forward. Hugo van Kuffeler, Chief Operating Officer of Old Park writes that based on the rise in CLOs and investor moves toward risker assets in search for yield, the market is in the midst of another financial bubble.

"What happened in June and to a lesser extent in the last couple of weeks gives a preview of what might come. Also, the difference between the situation to come and what happened in the period from the summer 2008 to the spring 2009 is that the bond holdings will not be able to act as a shock absorber to the equity holdings this time around, as it is highly likely that equities and bonds will move in the same (downward) direction," he writes.

The letter also touches on the recent announcement by PIMCO that the firm is working on a managed futures fund of its own. "PIMCO realise that low interest rates have made it challenging for their fixed income products to produce decent returns for investors, resulting in $18.4bn in outflows in past 12 months," the letter says.

He further notes that PIMCO's move into the managed future space is an endorsement that these types of funds can provide real diversification. Kuffeler also cautions investors against going int......................

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