Fund update | March 2016
The Odey International Fund experienced a difficult March quarter with the Fund down 21.9%. Negative performance came predominantly from short equity holdings in the Materials, Financials, Consumer Discretionary and Energy sectors.
Central bank measures in a world of QE
Since the second quarter of 2014, Crispin Odey, manager of the Fund, has been warning of a faltering Chinese economy, slowing economic growth in developed markets, and a fall in commodity prices and emerging market incomes. At the heart of his message has been a concern that global central banks used all of their monetary firepower in the economic downturn of 2007-09 and now have less ammunition to deal with future negative growth shocks.
In this month’s commentary, Crispin discusses central banks’ role in a world of quantitative easing and the ‘side-effects’ of zero interest rates. “In a world of QE and low interest rates, banks become increasingly unprofitable which may lead them to become that much more reckless in pursuit of higher yields to expand into sub-prime, auto loans, leveraged loans and credit cards. It certainly does not encourage them to lend naturally. Without lending and credit however, economies will find it, as Japan has shown since 1996, difficult to grow.” Read more
View the March 2016 performance report