Equity markets were volatile in June and the volatility has continued into July, as China and Greece wrestle with separate hurdles. The AFINA investment products pulled back along with other equity benchmarks, but continue to have a solid 2015:
- The AFINA Affinity Fund was down -4.2% in June (+2.0% YTD) and has generated an annualized return of +5.2% since its October 2014 inception.
- The AFINA Optima10 was down -2.0% in June (+10.7% YTD) and has generated an +17.8% annualized return since 2010.
The AFINA Optima10 continues to have a strong 2015 with a return thus far of +10.7%. The Optima10 is currently 95% weighted in equities and 5% in cash following its rebalancing at the end of June. New positions include Michael Kors, Western Digital and Seagate Technologies.
The AFINA Affinity Fund had a more volatile June but remains up +2.0% for 2015, generally outpacing its equity benchmarks. The Fund’s overall cash weighting at the end of June was 35% and we have taken advantage of a few opportunities during the early July sell-off, which has reduced our cash weighting to 29%. At the end of June, financials accounted for the largest sector weighting at 23.4%, followed by consumer/health care at 21.4%, technology at 15.3% and energy at 5.3%.
Notably for the AFINA Affinity Fund, we initiated a position in Loyalist Group in late May. However, poor operational and cash flow management at the Company resulted in awful financial results and a significant sell-off in June. Loyalist has since installed an entirely new management team and board, which have solid resumes and have already recapitalized Loyalist for a turnaround in our view. We have revisited our thesis on Loyalist a number of times and believe that the additions to our holding in June will reward our investors going forward.
As of June 30, 2015. All figures are net of fees and other expenses. Past performance is not indicative of future results. * 2014 results for the AFINA Affinity Fund LP include performance from October 1, 2014. Refer to afinacapital.com for full details and disclosures.