We have been long U.S. equities in a stable relative value trade to the bond market but once the FBI announced further investigation into Hillary Clinton the stability vanished. A relative value markets depends on stability to make incrementally moves. Once stability is removed all relative value decreases causing further pressure. In hindsight, we missed the counter to hedge up any political risk going into the election and given the recent announcement out of the FBI a Clinton presidency is no longer assured and the markets are faced with the unknown possibility of a Trump presidency. The risk is if the central banks will need to provide stability but with bloated balance sheets will have only limited ammunition. The best case is a stronger US$ helping global markets discourage a sell-off. The worst case is a global sell-off of both bonds and equities.
In our whitepaper, Monetary Policy in a Global Economy we point out the Fed should stop artificially raising interest rates by paying interest on excess reserves and allow the Natural Equilibrium of Interest Rates for fed funds to settle at 0%. By widening the yield curve with fed funds anchored at 0%, the Fed has opportunity to further support the banking system and support the U.S. economy with cheap capital. This would reignite the economy which would naturally raise interest rates and move capital into the asset markets.
In 2012 modeled performance (7 ˝ mo.) net of all fees was +12.46% with a 10% Hurdle rate
In 2013, modeled performance net of all fees was +19.73% with a 10% Hurdle rate
In 2014, modeled performance net of all fees was +56.42% with a 10% Hurdle rate
In 2015, modeled performance net of all fees is +72.68% with an 8% Hurdle rate
In 2016, modeled performance net of all fees is +29.04% with a Graduated 10% Hurdle Rate
The Unicorn Macro Fund, LP (“Fund”) operates under the SEC rules of 506(c) of Regulation D. This rule allows general solicitation as long as all purchasers of the Fund are accredited investors and the Fund takes reasonable steps to verify that purchasers are accredited investors. The 506(c) rule benefits funds that perform better than their peers, because for the first time, Regulation D funds can post their results publicly.
The Fund trades both long and short positions in a variety of global markets and its performance is not correlated to any one market. Performance of the model of the Fund is measured by Net Asset Value (NAV) which is net of all fees, is unaudited, and may include the use of estimates. Individual results will vary based on the timing of an investment and past performance is no guarantee of future results and there is a possibility of loss.
The modeled results are based only on capital appreciation from macro style trades. The results do not include dividend reinvestment or any other form of cash flow and are taxed as ordinary income. All trades have a risk/reward objective of at least 3 to 1 and each full position risks no more than 2% of assets. There will be times when market conditions may alter these objectives. Since the inception of the model our trading of the methodology has become more precise.