(Bloomberg) -- Some funds are starting to report outsized gains from shares they snapped up during last week’s global equity rout.
Vantage Point Asset Management in Singapore said a basket of Japanese equities it bought during the selloff has since soared around 20%. Sydney-based GCQ Funds Management meanwhile purchased shares in Alphabet Inc., which have now rallied around 10% from their lows, while Collins St Value Fund saw gains in fintech and oil-and-gas stocks it acquired during the selloff.
The trades made by Vantage Point were “deeply uncomfortable,” even though they were accompanied by a long position in the dollar against the yen as a hedge, chief investment officer Nick Ferres said in an interview.
The money manager is looking to make more tactical trades — including in the Japanese stocks it bought last week — around the time of the Federal Reserve’s September meeting, when US policymakers are expected to start cutting interest rates, he said.
“Importantly, we had reduced Japanese equities in early July before the selloff,” Ferres said. “The episode isn’t over and there will likely be another drawdown phase before October.”
Funds prescient enough to have bought at the right time benefited as a rapid reversal of sentiment saw risk assets retrace most of their losses. There’s still little clarity though over the whether the rebound is durable given the uncertainty over global growth and the challenges facing the Federal Reserve about when and how much to cut interest rates.
One driver of the slump was fears about aggressive rate hikes from the Bank of Japan, which spurred a yen surge and a collapse in Japanese equities, but they have since eased following reassurances from a deputy governor.
‘Attractive Again’
In addition to buying Alphabet, GCQ added to its stakes in Amazon.com Inc. and Rightmove Plc, which have each rallied more than 5% from their lows last week, chief investment officer Doug Tynan wrote in a note to clients.
“We had been reducing our exposure to Big Tech in the last few months, which is now serving us well as investor sentiment turns away from companies with the greatest AI exposure,” he said. “That said, we think some of the exposures we had trimmed have now fallen far enough to be attractive again.”
Melbourne-based Collins St Value Fund had built up a cash holding of around 15% of its portfolio, and deployed that during last week’s slump into favored Australian-listed stocks such as Humm Group. Ltd. and Carnarvon Energy Ltd.
“We’ve been buying a lot of companies that we’ve previously owned,” said Michael Goldberg, managing director and portfolio manager for the money manager. “We felt like the market as a whole had been expensive for quite some time.”
©2024 Bloomberg L.P.