Q3 Rally Lifts YTD Noster Capital Returns To 7.8% And $100M AUM

In its Q3 letter obtained by Hedge Fund Alpha, Noster Capital reported 9.3% gains for September, pushing year-to-date gains to 7.8%. Primary portfolio themes, including gold (14.2% YTD) and equities (1.7% YTD), contributed significantly to the gains. However, overall performance is trailing the S&P 500 index.

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One of the reasons identified by managers for the trailing performance, however, is the euro denomination of the assets. When the euro is strong, the assets that are not in euros face additional issues. In the first nine months of the year, the euro was constantly outvaluing the dollar, currently standing at 14%.

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While the dollar acted as a safe haven currency during market downturns for the past seventy years, this year it failed to do so. In times of market volatility, capital tends to return home, but this time the dollar continued to lose value. The portfolio faced two major problems. The first was a long position in dollars, which served as a hedge. The second issue is that the majority of the fund’s assets are in dollars. The long dollar position, which was intended as a hedge, failed to perform as the dollar continued to lose value.