June 14, 2021

In the Frame - Issue 5, A message from Hue
Managing Director

A message from Hue: What I saw in May 21

May saw most global equity markets rise. The S&P/ASX 200 put in a solid month of performance, rising +1.93%. Fixed income markets continued to consolidate, which once again allowed investors to focus on how well the global economy is recovering from the pandemic.

Inflation remained at the forefront of investors’ minds, as the implications of changes to interest rates and current asset purchase programmes, continue to be considered. Commodity markets experienced extreme volatility as China started to crack down on rampant commodity speculation.

Continuing to thrive

The long short Australian equity strategy finished the month down -0.35% versus the S&P/ASX 200 (XJO) +1.93% for the period. Once again, we saw the XJO rally to a new all-time high and then aggressively decline by-3.5%. This choppy price action is generally the least favourable conditions for the strategy, so generating flat performance over the period, should be viewed positively.

The Global Macro strategy had another strong month, finishing up +6.96%. The core strategy contributed +6.07%, while the trading strategy added +0.94%. The largest contributors were our investments in the China A-50 share market (+1.72%), Aeris Resources Ltd +1.61% and S&P/ASX 200 Future trading (+1.40%).

The performance of the Global Macro strategy continues with an impressive 12-month rolling return of +34.29%, whilst the 6-month performance is a solid +11.32%. The long short Australian equity strategy continues to hold its price near highs, with the 3 & 6-month performance being +2.08% & +10.71% respectively.

Chinese government commodity crackdown

Iron ore, coal and steel sparked profit-taking in the overbought materials sector. The selling began when Chinese officials voiced concerns over the prices of raw materials. They increased trading limits and margin requirements on some iron ore, coal, nickel and crude oil contracts. This type of market intervention increases the difficulty of trading these markets and does constantly make us question our involvement there.

All-time highs

Most equity markets across the globe continue to make new all-time highs. Every time this happens, I see financial market commentators come out of the woodwork and say that there is an impending market crash. In our opinion, there is nothing more bullish than markets and companies hitting all-time highs. Commentators that do this will get it right, eventually, however having this attitude generally ensures they miss the bulk of the move.


This time of the year is thought of as good and bad around the office. Good, that we get to see the end of the financial year pass and assess how well we have performed for the year. It is also a good opportunity to take stock and set new goals and objectives.

The reason we also find it to be the worst time of the year is due to the end of financial year re-balancing, end of quarter re-balancing, end of month re-balancing, profit-taking, loss crystalizing, window dressing and positioning for the impending report season.

At this time of the year, we always see some real whacky price action which we attempt to ‘look through’ considering the factors above.

If you would like to discuss any of these points, please email me at hue@framefunds.com.au or call our office on 02 8668 4877.

Hue Frame
Managing Director

Past performance is not an indicator for future performance. This is not intended to be financial advice and does not take into account any particular person’s circumstances. Before relying on this information, please speak to an independent financial adviser.


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