September Monthly Update
* Since inception of the strategy.
** Since inception of the strategy May 2009. Fund returns from January 2010.
*** Since inception of the strategy June 2010. Fund returns from November 2010. The Benchmark equals 50% CAD T-Bills / 50% Merrill Lynch High Yield Master II.
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Concerns over the European debt crisis and slowing global economic growth led to widespread sell-offs in major asset classes throughout the month. Commodities declined substantially, led by silver
(-27.9%) and gold (-11.4%), while the US dollar jumped 7.7% to $1.04 vs. the Canadian dollar. Bond returns were mixed. Canadian and US government bonds rallied, with their yields falling to record lows, while US high yield corporate bonds declined and are now yielding 9.0%.
In Canada, the S&P/TSX Composite Total Return Index (TRI) was down 8.7%. The largest losing sectors were information technology (-19.7%), materials (-14.7%) and energy (-12.3%). The largest winning sectors were consumer staples (1.4%) and utilities (0.3%). The S&P/TSX Small Cap TRI dropped 14.9%.
In the U.S., the S&P 500 TRI was down 7.0%, the NASDAQ Composite declined by 6.4%, and the Russell 2000 TRI fell 11.2%. The largest losing sectors were materials (-16.6%), energy (-12.6%) and financials (-11.6%). All sectors posted negative returns for the month.
The MSCI World Index declined 8.6%. The worst performing countries (in USD) were Austria (-22.3%), Greece (-20.3%) and Hong Kong (-16.4%). All countries posted a negative return for the month.
The Hillsdale Canadian Core Equity Fund, our Canadian large cap long-only strategy, returned
-10.2% versus -8.7% for the S&P/TSX Composite TRI. The largest losses came from positions in Potash Corporation of Saskatchewan Inc., Suncor Energy Inc. and Research In Motion Limited. The largest gains came from positions in Canadian Utilities Limited, Intact Financial Corporation and IAMGOLD Corporation.
The Hillsdale Canadian Performance Equity Fund, our Canadian small cap long-only strategy, returned
-12.3% versus -14.9% for the S&P/TSX Small Cap TRI. The largest losses came from positions in First Majestic Silver Corp., Calfrac Well Services Ltd. and Neo Material Technologies Inc. The largest gains came from positions in Open Range Energy Corp., Nordion Inc. and B2Gold Corp.
The Hillsdale US Performance Equity Fund, our U.S. small cap long-only strategy, returned
-11.8% versus -11.2% for the Russell 2000 TRI. The largest losses came from positions in CVR Energy, Inc., Intrepid Potash, Inc. and Veeco Instruments Inc. The largest gains came from positions in Big Lots, Inc., Deckers Outdoor Corporation and The Medicines Company.
The Hillsdale Canadian Long/Short Equity Fund returned -3.3% versus -8.7% for the S&P/TSX TRI. The long portfolio contributed -13.0%, with the largest losses arising from positions in Trican Well Service Ltd., Ensign Energy Services Inc. and Precision Drilling Corporation. The short portfolio contributed 9.7%, with the largest gains coming from positions in NovaGold Resources Inc., NuVista Energy Ltd. and SouthGobi Resources Ltd. The fund is currently $1.20 long and $0.66 short for a net market exposure of 54%. All sectors are net long.
The Hillsdale Global Long/Short Equity Fund returned -2.6% versus -8.6% for the MSCI World Index. The long portfolio contributed -10.1%, with the largest losses arising from positions in CF Industries Holdings, Inc., Joy Global Inc. and Baidu.com, Inc. The short portfolio contributed 7.5%, with the largest gains coming from positions in Safilo Group SpA, Just Energy Group Inc. and Seabridge Gold Inc. The fund is currently $1.17 long and $0.82 short for a net market exposure of 35%. The portfolio is net long information technology, materials and health care, and net short consumer discretionary.
The Hillsdale Enhanced Income Fund returned -4.5% versus -1.7% for its benchmark, and is down slightly for the year. Hedging ETFs returned 48% which was not enough to offset losses, particularly in non-North American equities and bonds. The Fund is currently allocated 52% to income equities and REITS, 36% to high yield bonds and 12% to inverse ETFs. The Fund is generating yields of 8.2% on bonds, 7.2% on REITs and 6.3% on equities before leverage of 1.6x. Beta to the equity market (TSX) is approximately 0.2.