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Hedge fund Insch Capital profits from actively managed gold strategy

Thursday, December 03, 2015
Benedicte Gravrand, Opalesque Geneva:

Insch Capital Management, a London and Lugano-based alternative investment manager, gained 6.06% in its gold investment strategy, Kintore, in November.  The total return in Kintore, which powers the Insch Goldilocks Fund, is up 27.2% YTD, while the price of gold fell by more than 5.9%.

According to Insch Capital’s announcement, “following extensive live trading, Kintore was opened to managed accounts in February 2015.  The new trading approach, which draws on Insch Capital’s lengthy experience managing currency portfolios, is a systematic trend-following investment strategy which treats gold as if it were a major currency and trades it in crosses against USD, EUR, CHF, GBP, JPY, AUD.   Each cross or position is ‘risk equivalent’ at inception, i.e. all positions are equivalent in terms of percentage of portfolio, volatility and risk.” Kintore posted returns of +11.49% in July.

With gold prices last week hitting new 6-year lows at $1053 ahead of the US Fed's meeting, new data released on Monday by the CFTC showed non-commercial traders in Comex gold futures and options holding the least positive position since December 2001, with the number of bullish bets falling 30% and the number of bearish bets more than doubling since gold's spike to $1180 in late October, reported Bullion Vault.

Insch Capital still stands by its core message to investors who require exposure to gold, that exposure need not mean buy-and-hold. 

Last month, Insch Capital published a report on the pitfalls of attempting to predict the gold price, pointing to the failure of precious metals analysts, in recent years, to hit the price target even quarter by quarter.

The last few years have proven that simply buying and holding gold is not a satisfactory strategy, the report says. A conventional investment portfolio of 40% equities, 40% bonds and 20% cash, would have outperformed a hedged portfolio that consists of 80% of the above with the remaining 20% in gold, by more than 8% over the past five years (Nov 2010 through end-Sept 2015). To generate profits from gold, a long/short exposure is vital, the report concludes.

Insch Capital started a commercial joint venture with Valbury Capital, the London-based FCA regulated broker, in September. The non-exclusive partnership will extend the potential distribution of the restructured Insch Insight Ltd. gold fund (Goldilocks) to Valbury’s substantial client base in the UK, continental Europe and Asia.

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