November Net Asset Value


 

TIDMDTL 
 
RNS Number : 1589E 
Dexion Trading Limited 
15 December 2009 
 

Dexion Trading Limited ("the Company") 
 
 
November Net Asset Value 
 
 
The net asset value of the Company's Shares as of 30 November 2009 is as 
follows:- 
 
 
GBP Shares 
 
 
+---------------+--------------+--------------+ 
|      NAV      |     MTD      |     YTD      | 
|               | Performance  | Performance  | 
+---------------+--------------+--------------+ 
| 131.05 pence  |    +1.45%    |   +11.46%    | 
+---------------+--------------+--------------+ 
 
 
In calculating the Company's Net Asset Value the Company's Administrator will 
rely solely upon the valuation of GBP denominated Permal Macro Holdings Limited 
("Permal Macro") Class A shares provided by Permal Macro. The Investment Adviser 
and third party service providers to Permal Macro, rely on estimates of the 
value of Underlying Funds in which Permal Macro invests, which are provided, 
directly or indirectly, by the managers or administrators of those Underlying 
Funds and such valuations may not be considered 'independent' or may be subject 
to potential conflicts of interest. Such estimates may be produced as at 
valuation dates which do not coincide with valuation dates for Permal Macro and 
may be unaudited or may be subject to little verification or other due diligence 
and may not comply with generally accepted accounting practices or other 
valuation principles. The Investment Adviser may not have sufficient information 
to confirm or review the completeness or accuracy of information provided by 
those managers or administrators. In addition, these entities may not provide 
estimates of the value of Underlying Funds in which Permal Macro invests on a 
regular or timely basis or at all with the result that the values of such 
investments may be estimated by the Investment Adviser. Both weekly estimates 
and bi-monthly valuations may be based on valuations provided as of a 
significantly earlier date and hence the published valuation may differ 
materially from the actual value of Permal Macro's portfolio. Other risk factors 
which may be relevant to this valuation are set out in the Company's prospectus 
dated 12th March 2008. 
 
 
Monthly Portfolio Review 
 
 
Investment Adviser Portfolio Outlook 
 
 
Although most of the global economic data indicates that the economic recovery 
is continuing, the Portfolio's managers remain cautiously positioned and 
question whether the recovery is sustainable over the long-term. The anticipated 
impact of any withdrawal of the fiscal and monetary stimulus which has been 
largely responsible for the recovery to date continues to be a major concern. In 
addition, unemployment figures remain high, particularly in the US and the UK. 
 
 
The Investment Adviser understands that the Portfolio's managers anticipate that 
the major central banks are likely to be forced to maintain their accommodative 
policies for a longer period in order to support global growth, and that this 
policy stance will no longer be a globally coordinated effort. Consequently, 
with the likelihood of the global central bank policy becoming increasingly 
differentiated, the opportunity set for global macro managers becomes even more 
diverse. 
 
 
Market Overview 
 
 
Throughout November global policymakers debated the best way to reduce their 
accommodative monetary policies. In the US, the Federal Reserve elected to keep 
the Federal Reserve's funding rate unchanged, reiterating a pledge to keep rates 
low for an "extended period". In Europe, the European Central Bank signaled that 
it may start to curtail liquidity measures by the end of the year, while the 
Bank of England expanded its quantitative easing program by an additional GBP25 
billion to a total of GBP200 billion. Whilst positive economic news helped 
sustain the global rally in risk assets, the Dubai World issue sparked a brief 
flight-to-quality amid concerns of further write-downs. 
 
 
Generally equity markets rallied through the month following positive US 
manufacturing and consumer spending data, above consensus corporate earnings and 
continued accommodative monetary policy. Despite negative US housing data, 
disappointing durable goods data and concerns regarding Dubai World fears, US 
equities ended the month strongly. European equities rose initially on 
encouraging earnings figures and manufacturing data, but later retreated as the 
strength of the Euro started to impact exporters. Japanese equities declined 
through the month, in part due to deflationary concerns over decreasing 
corporate goods prices. Several of the Portfolio's managers believe that the 
improvement in equity markets, although fragile, may last to the year end as 
investors continue to chase higher yields and ignore reports of negative 
economic data. Some managers even note that certain emerging market countries, 
in particular Brazil, have become priced for perfection with market participants 
not taking into account the country's inherent risks. The Portfolio's managers, 
therefore, remain cautious, while continuing to acknowledge that there is a 
disconnection between economic reality and market action. 
 
 
Developments in the US and Europe fixed income arena drove the market's 
performance and global fixed income prices broadly ended the month higher. Bond 
yields in the US rose following the US Treasury's announcement of additional 
auctions, but started to turn as markets grew increasingly cautious about the 
strength of the recovery and concerns about declining equity prices. At month 
end, yields dropped sharply following the news about Dubai's debt problems and 
as investors shifted assets into the relative safety of US government bonds. In 
Europe, yields also rose at the start of the month, with UK gilt yields 
increasing sharply, following strong PMI data and a reduced increase in the Bank 
of England's quantitative easing policy, only to fall later as data indicated 
that the UK is still in a recession. Japanese yields declined for much of the 
month following falling equity prices. In the fixed income markets, many of the 
Portfolio's managers believe that the major central banks will maintain low 
interest rates for an extended period. As a consequence they have invested in 
long positions at the front end of yield curves in the major developed 
countries. In addition, given the uncertainty regarding the timing of when 
policy makers will start scaling back stimulus efforts, many managers have long 
positions in interest rate volatility. Some managers believe that rates at the 
long end of the US yield curve will have to rise as foreign investors are not 
going to be willing to lend at the current yields. 
 
 
In currencies, the US Dollar continued to fall, reflecting its increasing role 
as a financing currency. US Federal Reserve comments regarding their intention 
to keep interest rates at historically low levels for the foreseeable future 
also acted as a negative influence on the currency. Commodity currencies 
performed strongly, particularly the Australian Dollar when, for the second 
consecutive month, the Reserve Bank of Australia raised its benchmark interest 
rate. Aided by the flight-to-quality following the Dubai crisis the Yen was also 
performed strongly. Outright positions in the US Dollar have been relatively 
small as the US Dollar's performance has been highly correlated with risk 
assets. Managers are bullish commodity-based currencies as the demand for metals 
and agricultural goods remains high and non-US investors continue to seek higher 
yields. Long positions in Asian currencies are also compelling. In particular, 
the Korean Won is considerably undervalued and one of the most free-floating 
currencies in the region. Lastly, managers are bullish the Mexican Peso as it is 
extremely cheap, especially against the Euro. 
 
 
Performance in the natural resources sector was broadly positive, with good 
performance across both equity and commodity markets, in spite of a late 
sell-off following concerns surrounding Dubai World. Strong gains in commodity 
markets were largely driven by the continued improvement in the outlook for 
global growth and a weak US Dollar. Crude oil was largely directionless due to a 
bearish supply situation combined with the prospect of improving demand in 2010. 
Elsewhere, gasoline posted positive returns and natural gas declined. Precious 
and base metals had strong gains through the month, with investors continuing to 
see gold as a store of value and a hedge against inflation. Agricultural 
commodities rallied due to attractive supply/demand fundamentals, particularly 
increased Chinese demand. The Portfolio's managers maintain a positive view on 
the natural resources sector, believing that investors will continue to look to 
commodities as a store of value amid weakening currencies, which should support 
prices over the short term. In addition, strong demand, particularly from Asia, 
and the need to restock inventories in the US and Europe, should provide further 
support. However, volatility is likely to remain high due to remaining 
uncertainty concerning global economic growth. 
 
 
Strategy Overview 
 
 
Discretionary: +1.15%. The Portfolio's managers' continued negative view of the 
US Dollar delivered profitable trades in short US Dollar positions versus 
emerging market and commodity currencies. In fixed income, profits were made in 
long positions at the front end of the yield curves in the US and Europe, as 
well as in yield curve trades in the UK. Managers also recorded gains in the 
commodities sector, primarily through long exposure to the agricultural sector. 
 
 
Systematic: +3.07%. Performance was driven by a number of longer-term trends, 
including short positions in the US Dollar against the Yen, the Swiss Franc and 
Euro, which benefited from continued US Dollar weakness, while long global fixed 
income, long equity and long gold positions also proved profitable. Returns from 
non-trend following managers were mixed, with positive performance coming from 
managers who were biased towards a flattening yield curve, whereas those 
managers with yield curve steepening positions posted negative results. 
 
 
Natural Resources: +5.78%. The strongest performing managers within this 
allocation were primarily those with positions in gold-related equities and, to 
a lesser extent, those with positions in agriculture-related equities. 
 
 
Relative Value Arbitrage: -0.60%. Equity market neutral strategies experienced 
losses in Japan as continued government stimulus perpetuated that country's 
"junk rally", causing long positions to underperform short positions. Fixed 
income arbitrage strategies also saw losses during the month, particularly in 
the US following the Dubai World shock and the resulting investor 
flight-to-quality. 
 
 
+-----------------------+---------------+--------------+-------------+--------+ 
| Strategy              |  Allocation   |  Number of   |    Performance by    | 
|                       |    as of      | Managers as  |      Strategy        | 
|                       |  30 November  |    of 30     |          %           | 
|                       |      %        |  November    |                      | 
+-----------------------+---------------+--------------+----------------------+ 
|                       |               |              |  November   |  YTD   | 
+-----------------------+---------------+--------------+-------------+--------+ 
| Discretionary§        |      52       |      23      |    1.15     | 17.73  | 
+-----------------------+---------------+--------------+-------------+--------+ 
| Natural Resources     |      4        |      9       |    5.78     | 27.12  | 
+-----------------------+---------------+--------------+-------------+--------+ 
| Relative Value        |      4        |      5       |    -0.60    |  3.58  | 
| Arbitrage             |               |              |             |        | 
+-----------------------+---------------+--------------+-------------+--------+ 
| Systematic§           |      27       |      10      |    3.07     |  7.29  | 
+-----------------------+---------------+--------------+-------------+--------+ 
| Cash                  |      13       |      -       |      -      |   -    | 
+-----------------------+---------------+--------------+-------------+--------+ 
| Total                 |      100      |     46§      |             |        | 
+-----------------------+---------------+--------------+-------------+--------+ 
 
 
§ Discretionary and Systematic have one manager in common. 
 
 
Strategy returns are in US$ and net of underlying manager fees only, and not 
inclusive of Dexion Trading's fees and expenses. 
 
 
Voting Rights and Capital 
 
 
The Company's share capital consists of 101,213,549 GBP shares with voting 
rights. This figure may be used by shareholders as the denominator for the 
calculations by which they will determine if they are required to notify their 
interest in, or a change to their interest in the Company under the FSA's 
Disclosure and Transparency Rules. 
 
 
Supplementary Information 
 
 
Click on, or paste the following link into your web browser, to view a full 
review of the Dexion Trading Limited portfolio. 
 
http://www.rns-pdf.londonstockexchange.com/rns/1589E_-2009-12-15.pdf 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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