Moominmama Portfolio Performance July 2010

A nice portfolio performance this month but the MSCI World Index rose 8.2% in USD terms. European and Brazilian equities made gains in that range. Bonds also performed well due mainly to the rise in Sterling. As you'd expect the portfolio still hasn't caught up to pre-GFC levels:

Permanent Residency

Congratulations to Snork Maiden who got her her permanent residency in Australia today! We've been here just over 2.5 years. So in 1.5 years she can apply to become a citizen. You need to be in Australia for 4 years and be a permanent resident for one year to qualify. Compare this to the US where I was 4 years into the process and still hadn't got my green card and I would have to wait 5 years after getting that to become a citizen. One of the reasons we moved to Australia is that I didn't want Snork Maiden to have to go through all of that long process from scratch.

Snork Maiden's Taxes 2009-2010

It's tax time again down under. The tax year ends on 30th June here and the deadline for submission is 15th October. It will be a while before I can do my own taxes but I have got Snork Maiden's tax return out of the way. As it is pretty straightforward and I have a spreadsheet set up from last year as well as last year's return to refer to it took me less than an hour to do. See last year's figures for a comparison.



I estimate that she owes $13 in taxes which is much better than last year. Her salary actually increased a lot more than this over the past year (from $71,772 to $77,756) but this was our first full year of making salary sacrifice contributions of $A225 per fortnight into superannuation (i.e. pretax retirement contributions). This reduced her take home salary. Otherwise, there is not a lot of difference. Australian investment income was a little higher and foreign investment income a little lower.

Her average tax rate was 22.78%. Her marginal tax rate is 31.5%. This covers all taxes as there are no state income taxes in Australia.

The NYT follows up their recent article on how it is illegal to rent an apartment for less than a year in Paris with one about doing just that. We're paying about the same as the author paid for the studio apartment in Paris for a hotel room. But it won't be as nice and isn't around the corner from the Louvre.

Early View: HFRI and Credit Suisse Dow Jones

HFRI is reporting a -0.81% return for hedge funds in June while Credit Suisse Dow Jones is reporting -0.88% with 77% of assets reporting. This compares with a HFRX return of -0.94%. I will report more when the final numbers for the month are in.

Snork Maiden got her second visa today. Where to? There is a clue in the picture. So things should all go smoothly now :)

June 2010 Report

The true numbers for this month will be slower to arrive than ever. Everest Financial still hasn't reported fund results for May. So I might as well go ahead with the numbers as they stand at the moment. As usual everything is in US Dollars unless otherwise stated:



Non-investment income was fairly good this month as I earned a chunk of consulting income. This month exchange rates were relatively stable. Global stock markets were down another 2.95% (MSCI World Index) and US markets 5.23% (S&P 500). In currency neutral terms we lost 5.24% and in Australian Dollar terms 5.25% in terms of investment returns, whereas investment losses in USD terms amounted to 4.53%. So exchange rate movements improved USD returns relative to AUD returns. A loss of $17-20k either way you look at it though.

Expenditure was a little high as we continued with some travel expenses. But nothing like the massive spending of last month.

Net worth fell by $US13k to $US364k (or by $A18k to $A429k). The allocation to Australian large cap stocks fell by 1.5% of assets due to the bad market. Our "private equity" investments were also badly hit. A -22% rate of return. The only positive area was real estate, finally showing some gains.

In France it is Illegal to Rent an Apartment for Less than One Year!

This New York Times story stunned me with how stupid regulation can be. So the government prefers wealthy people to leave their apartments empty for much of the year instead of renting them out? I wonder what the hotel industry did to get that law passed? Seems there is so much inefficient regulation in the housing industry worldwide.

HFRX Indices June 2010 Performance Notes

The HFRX Global Hedge Fund Index declined by -0.94% for the month of June, bringing the YTD 2010 performance to -1.20%.

The weakest area of hedge fund industry performance was Equity Hedge strategies, with the HFRX Equity Hedge Index declining by -1.38% in June. All EH sub-strategies posted declines for June, with the most significant weakness in Fundamental Growth strategies, which declined by -2.85% for the month. Fundamental Value strategies posted more modest declines, with these posting a loss of -0.65%, while Equity Market Neutral declined by -0.77% in June, maintaining a gain of +1.93% for the 1H10.

Partially offsetting weakness in Equity Hedge, the HFRX Relative Value Arbitrage Index posted a gain of +0.29%, adding to the YTD gains to post a +1.29% gain for 1H10. Credit-focused Convertible Arbitrage and RV: Multi-Strategies were positioned for the financial market volatility and falling US yields which ensued in June, with both posting small gains in June to add to YTD gains; with each of these gaining +1.92% and +3.23% for 1H10, respectively.

The HFRX Macro Index posted a decline of -1.32%; as with the previous month, losses in fundamental, discretionary Macro strategies offset gains in Systematic trend following strategies. In total, Macro strategies have declined by -2.32% in 1H10 but the diversified, quantitative, systematic, trend-following funds gained +0.64 in June, with long positions in developed market fixed income offset weakness in currencies & commodities. Similar to the Financial Crisis of 2008, Systematic Macro strategies are the top areas of industry performance in 1H10, posting a gain of +4.53%.

The HFRX Event Driven Index posted a decline of -0.53% on corporate credit weakness, slowing M&A environment, increasing risk aversion and widening deal spreads, bringing 1H10 performance to -0.73%. The weakest area of ED performance was Distressed strategies, which declined by -3.73%, paring 1H10 gains to +0.38%. Merger Arbitrage and Special Situations funds posted declines of -0.58% and -0.48% in June to pare 1H10 performance in each of these to +0.13% and +0.03%, respectively.

Cambria Investments Plans GTAA ETF

I have long been a follower of Mebane Faber's blog World Beta. Quite a few of the ideas I have presented were influenced by my reading there. Up till now, investing with Faber's company has required a large investment. But now they are planning to introduce an ETF which will implement one of their key strategies. I think I might invest in that when it becomes available.

Moominmama Portfolio Performance June 2010

Moominmama's portfolio actually saw gains this month despite the 2.95% fall in the MSCI World Index in USD terms. As always I report Moominmama's performance in USD terms. The main reason for the gain was the rise in Sterling which helped both Sterling Cash and Bonds perform well this month. The fall in USD cash reflects management/safekeeping fees rather than actual negative returns on USD cash which is impossible if we are measuring things in US Dollars! Non-US equities also did OK.