A strong, one-way move has been seen in the USD. This was and is driven by US interest-rates-developments and broader risk-aversion sentiment in global markets:
- The shift in interest-rate-driven sentiment marks what is seen by some as the ending of a multi-year cycle.
- On the bonds side, it’s been called the “Worst US Bond Selloff Since 1792”.
While we’d typically (statistically speaking) be on the right side of such events, this time around our core strategy got ‘caught out’. The positions are still open, however, and we are actively working to recover the open-trade loss, as we’ve done in the past.
The Importance of the Base Model in Long-term Viability
It’s important to note that this latest drawdown amount is nothing we haven’t been through before, and within acceptable ranges (lower, in fact). Hence there’s no meaningful concern, due to the nature of MSP’s design and IU’s broader approach to risk-management.
When evaluating the long-term viability or stability of the service, the base model is the key growth/drawdown relationship to watch. The base model naturally operates without performance-multipliers, providing a distilled view of MSP’s long-term stability outlook.
Risk Management and Strategy Adaptation
- At this time, the open positions and risk are neutralised through some hedging trades.
- The only exposure we currently have is a small AUDNZD position.
The multi-strategy approach offers the key benefit of adaptability to essentially any market conditions, even if some patience is required for the benefit of long-term growth.
Although there’s real long-term concern among equity/traditional markets, we have the flexibility to simply allow some time for the fundamentals-driven erraticness (being volatility + unpredictability) to blow over.
More typical trading/profit-generation is expected to resume from next week.
If you have any questions or need further clarification on any topic, feel free to reach out.