December 15, 2021

In the Frame - Issue 11, A message from Hue
Managing Director

A message from Hue: What I saw in November 2021

November could only be described as a wild month. Equity markets rose with low volatility for the majority of the month, and then along came the new variant named Omicron. Volatility expanded within the last week of the month, and made investors quickly reposition their investments. We witnessed an impulsive move lower in most markets with Omicron used as the excuse, however, in our view, market participants were looking for an excuse to reduce equity exposure, in the face of tapering in the US and some major economies.

Iron ore, rebounding

I have written about the iron ore price in the last few In the Frame issues due to the severity of the recent decline and how this has been a classic play by the Chinese government. At the end of October and during November, the Chinese government stated that the price of iron ore (and a selection of other talked-down commodities) had reached levels that were more sustainable from a manufacturing and industrial perspective. This communication comforted the market and help iron ore rebound over November. The iron ore contract which trades on the Dalian Commodities Exchange jumped approximately 20% last week alone.

Tapering, when and by how much

At the start of November, the US Federal Reserve stated that inflation was transitory and that if they saw signs inflation was moving consistently beyond levels they want, they will adjust their monetary policy stance. Following this meeting, multiple speakers from the Fed said they may bring their tapering plan forward. By the end of the month, Jerome Powell testified to the Senate and stated they can retire the term ‘Transitory Inflation’. This confirms what everyone, bar the Fed, has been saying, inflation is here, and possibly is going to stay a lot longer than we think.

Nu, Xi, Omicron

The first South African doctor, Dr. Angelique Coetzee, to alert the authorities about patients with the Omicron variant has stated that although the symptoms of the new variant are unusual, they are very mild and patients recovered after 1-2 days of bed rest. On a side note, most people think the World Health Organisation skipped Nu (New) to avoid confusion, and Xi for political reasons. The WHO labelled it a variant of concern, so although the symptoms are mild, it is worth monitoring closely.

Portfolio performance

During November, we saw a mixed performance from both our strategies. Our global macro strategy had a superb month, both absolutely and relatively, it rose +1.285%. The Long Short Australian Equity strategy continued to consolidate at highs, it declined by -1.06%.

The Frame Futures Fund (FFF) had another good month of performance. The core strategy had a solid month of performance, it generated +2.6%, while trading strategies detracted -1.00% from performance.

The largest contributors to the performance were investments in listed iron ore producers (+3.20%) and our Long US Dollar Index Future position (+0.61%). Our investment in the Russell 2000 was the largest detractor (-2.37%). 

The three & 12-month performance of the FFF continues at a solid +5.12% and +15.96%.

The Frame Long Short Australian Equity Fund (FLSAEF) dropped -1.06%. The strategy had a mixed month of performance as market conditions continue to impact performance.

Largest contributors for the FLSAEF were Fortescue Metals (ASX: FMG), Pilbara Minerals (ASX: PLS) and Cleanaway Waste Management (ASX: CWY), they contributed +0.56%, +0.47% and +0.39% respectively. Largest detractors were Pinnacle Investment Management (ASX: PNI), Oil Search (ASX: OSH) and Bank of Queensland (ASX: BOQ) which detracted -0.64%, -0.49% and -0.39% respectively.

The 12-month performance of the FLSAEF continues at a consistent +8.31%

If you would like to discuss any of these points, please email me at 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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