Trident Fund LP performance update for the month ended August 31, 2020.
Q2 2020 hedge fund letters, conferences and more
The Trident Fund LP returned +6.1 percent in August, and the fund is +20.3 percent net year to date.
Oceans of global liquidity flooded global equity markets in August, and the Trident Fund successfully rode the wave. Gross of fees, Trident earned +10.2 percent in global equity index markets. In commodity and currency markets, Trident made +0.2 percent each, while losing -1.6 percent in global fixed income.
Of the three Trident models, the Risk Regime model earned the majority of the returns as it participated in the global “risk-on” trade from the stock side. Still, given the portfolio’s strict risk management guidelines, Trident had significant long positions in global fixed income as a systematic hedge. When bond yields started to rise for the first time in two years, Trident was positioned for continuing Fed ease and did not profit from the fixed income market movement.
The Engel model, meanwhile, was able to preserve capital, earning just +0.4 percent. While the Vega model, which trades only in times of “risk-off,” did not trade.
Of the markets that Trident trades, the most profitable were stock indices, currencies, and industrial metals. Heading into September, Trident remains long stock indices, but with smaller exposure. Fixed income positions will profit from a steepening yield curve, and commodities will profit from higher inflation.
