September 2016 Investment Performance & Saudi Aramco IPO

With September historically being the worst month of the year for US stocks, it was relatively uneventful and demonstrates the calm in the stock market. While volatility could increase around US elections on November 8, 2016, rising interest rates will continue to drive more money into US equity markets as fixed income moves out of favour.

While we are bearish on commodities and oil prices in the long-term, we remain bullish on oil prices heading into 2017 as Saudi Aramco, the world’s most valuable company, plans a $2 trillion IPO in 2018. Not surprisingly, the Organization of the Petroleum Exporting Countries (OPEC) on September 28, 2016 managed to agree to its first production output cut in eight years as Saudi Arabia’s interest in higher oil prices to support its Saudi Aramco IPO valuation is apparent.

The AFINA investment products continued to outperform in 2016. Cash levels across our actively managed products remain relatively high as we are risk averse in the near-term given the polarizing US election. A summary of the AFINA investment product performance is as follows:

  • The AFINA Affinity was up +0.7% in September and up +14.9% in 2016.
  • The AFINA Optima10 was up +1.5% in September and up +12.7% in 2016.

As of September 30, 2016. All figures are net of fees and other expenses. Past performance is not indicative of future results. Refer to https://www.afinacapital.com/legal/ for full details and disclosures.
(1) The AFINA Affinity Fund LP fully hedges its US dollar exposure. Accordingly, the AFINA Affinity Fund LP benchmark represents the 50% weighting of the S&P 500 Total Return Index in US dollars and a 50% weighting of the S&P/TSX Composite Total Return Index in Canadian dollars.
(2) The AFINA Optima10 Managed Account does not hedge its US dollar exposure. Accordingly, the AFINA Optima10 benchmark represents the 50% weighting of the S&P 500 Total Return Index in Canadian dollars and a 50% weighting of the S&P/TSX Composite Total Return Index in Canadian dollars.