Our World Equity Fund - Update on Greece

Greece is definitely the word.

As markets fixate on the Greek political/financial crisis, we thought it timely to update you on our World Equity Fund positioning.

Currently the Fund has 22% exposure to mainland Europe and 3% to the UK.  On 19 June we hedged out 75% of our European risk (by selling Eurostoxx600 futures equivalent to 17% of the portfolio).  Subsequently we also sold S&P500 futures equivalent to a further 5% of the portfolio.

Our initial hedging decision was based on the view that markets were complacent about the risk of a political "accident", even though many commentators did (and still do) expect a resolution that keeps Greece in the Euro.  Frankly, we find it impossible to estimate the risk for or against this, it is fair to say that both sides have created entrenched positions for the current status quo that seem quite hard to bridge.

Last night, equity markets were off between 2% (in the US) and up to 5% (in Europe).  We don't believe this is the trigger for a significant sell off - in fact we believe this volatility creates potential investing opportunities in the weeks ahead.

We see our equity hedging as short term.  The trigger for removing the hedge will be clarity around the future status of Greece, it's unsustainable debt , and its inclusion (or not) in the Euro.

The World Equity Fund return for the last 12 months is +30.1%, and for the month to date, +0.4%.

If you would like to discuss this in greater detail, please contact us by email or phone.

Regards

John and Paul

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