BH Macro (BHMG)
Results analysis from Kepler Trust Intelligence
· In the financial year ending 31/12/2021, BH Macro (BHMG) combined with BH Global to create a much larger entity with hopefully greater liquidity, the primary rationale for the combination.
· Brevan Howard Capital Management LP (BH Macro's manager) also asked for a reversal of some of the fee concessions granted at the time of BH Macro's previous tender offer. These proposed amendments were put to a shareholder vote, where 82.5% of voting share rights voted in favour.
· NAV performance was modest but consistent for 2021 with a total return of 2.76% per share for the Sterling shares. Over the course of 2021 the manager's core theme of persistent and rising inflation did play out and deliver returns, but other, usually correlated themes such as rising long-end rates and steepening yield curves did not.
· BH Macro's chairman summarized his outlook thus: "2022 holds out the prospect to be an extremely volatile year both at the geopolitical level and at the economic level. It is possible that conditions will be remarkably different from those that we have experienced for the last 40 years. I refer particularly to the implications of resurgent inflation which despite previous statements from government agencies and central banks that it was transitory now appears to be embedded worldwide. This is an enormous sea change in the background for financial markets. I hope that it will create the conditions in which your Manager will flourish but we remain confident that the nature of the convexity of the trades that they put on, and their acute attention to risk, will ensure that if their trades are unsuccessful in this volatile environment there will be limited downside for your investments."
BH Macro (BHMG) now has a market capitalisation of nearly £1.2bn (including the GBP and USD share classes), and a more diversified share register than before the combination with BH Global. BH Macro is a feeder into the Brevan Howard Master Fund. The Master Fund aims to generate capital growth through a combination of global macro and relative value trading strategies.
BHMG has exhibited clear diversification from risk assets over its lifetime. Its track record shows that it has delivered strong returns in those periods which have proved most difficult for equity markets. 2020 was the strongest calendar year of performance for the Master Fund since inception, which sets the more modest performance in 2021 into context.
Investors' continued confidence in the trust is reflected in the premium to NAV at which the shares have consistently traded since the merger with BH Global. Performance over 2022 so far has been impressive, with BHMG's exposure to rising interest rates a particular driver. For the calendar year to the end of March 2022, the GBP share's NAV is + 8.36% with a NAV performance of +5.5% in March alone.
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