GTC Trendline – December 2013
Seeing the wood for the trees
2013 will be a year potentially remembered by investors as a significant inflection point regarding investment market forces. When the dust and commentary have settled on the year, certain dominating influences including the United States and politically driven financial repression will remain.
The biggest story of the quarter, and indeed of the year was the announcement of the starting date for the much feared taper. The Federal Reserve (Fed) announced that it would finally begin reducing the amount of securities purchased by $10 billion per month to $75 billion from January 2014. Market reaction to the announcement in December was mild in comparison to the “taper tantrum” experienced in May.
GTC Fund Performances
The GTC Fixed Income Fund has continued to deliver strong returns relative to cash over all periods as well as outperforming short dated bonds over the recent quarter. Although the manager has increased the fund’s duration, the exposure remains concentrated on the shorter end of the bond yield curve. The increase in exposure to credit instruments has also been instrumental in achieving above benchmark returns as the fund has benefited from higher yielding assets with a minimal increase in risk.
