The new equity strategy is designed to benefit from what the Gars team believes is a reduction in the valuation differential between integrated oil stocks and global equities.
The recently adopted position provided one of the biggest boons to performance last month as geopolitical tensions between the US, China and Russia ramped up and supply-side fundamentals pushed oil prices higher.
The absolute return fund’s performance on a one-month view was healthier than the previous month but was still in negative territory. Net of fees, Gars produced returns of -0.4% in April compared with -1.3% in March.
However, it still lags peers in the IA Targeted Absolute Return sector on a one, three and five-year time horizon, yielding negative returns over one and three years.
Year-to-date, the fund is down -2.78% compared with the IA TAR sector average of -0.01%.
As with the previous month, positions in global Reits, long Indian rupee versus Swiss franc and Italian versus German interest rates were beneficial for the portfolio.
Gars said its emerging markets assets, including an EM versus UK equity and EM income strategies, ended the month on “a weaker note” impacted by a stronger dollar and the prospects for higher interest rates and disruption to global trade from president Trump’s tariff threats.
Its EM versus UK equity hedge particularly struggled as the FTSE 100 regained some ground from its losses over the first quarter and ended April up 6.4% thanks to a weak pound.
