Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BH Macro. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

BH Global (BHGG) aims to deliver strong risk-adjusted NAV returns in all market conditions. It aims to achieve this by investing in the range of trading strategies offered by Brevan Howard through its Multi-Strategy Master Fund.

As we discuss in the Performance section, strong performance during 2020 has prompted renewed interest in Brevan Howard as a firm, with AUM rising from $7.5bn to c. $11.4bn so far this year. With a new CEO, Brevan Howard has been hiring trading talent and its number of traders has risen from c. 40 to around 55. In time, we think this will likely filter through to BHGG, which can be more exposed to a wider range of asset classes than the BH Master Fund (or BH Macro).

This wider exposure to asset classes allowed BHGG to outperform BH Macro during Q2, and has contributed to the strong returns made year to date (+17.1% as at 06/11/2020). BHGG has only experienced one down year over the 12-plus years since launch (-1.32% GBP NAV in 2015). This is illustrative of Brevan Howard’s strong risk controls which, as discussed in the Portfolio section, are built into the organisation’s DNA. The managers aim to control downside through strict risk limits on an underlying trader basis, but also at a portfolio level.

During 2020 the investment committee made some significant changes to the allocation of the underlying funds. The percentage invested in the BH Master Fund was reduced from 43.5% (as at 31/12/2019) to 20%. An increase was made to the ‘single-manager portfolio’ (from 40% to 59.5%, back towards its previous peak of over 60% in 2018).

Analyst's View

The chairman of BHGG describes the fund as “structurally uncorrelated” (2020 interims), and in our view the key attraction of BHGG is its ability to generate returns irrespective of the direction of markets. Historically, the best NAV returns have been generated in periods of poor equity returns and heightened volatility. During the first half of 2020, the fund delivered its highest six-monthly performance (+14.5% for the GBP share class in NAV terms). With equity markets once again elevated, and political risks heightened, BHGG’s portfolio diversification attributes are increasingly relevant.

These attractions have not eluded investors, and BHGG’s discount has narrowed. As a result, both BHGG’s NAV and share price have outperformed equity markets significantly so far this year. The current premium to NAV for the GBP shares of 1.3% compares to an average discount over the last three years of 4.3%. However, BHGG continues to trade at a significant discount to sister BH Macro, which trades on a premium of 13.5%. This differential has rarely been wider, and in our view means that BHGG currently offers a better-value access point to Brevan Howard’s traders and strategies.

In our view BHGG remains a useful tool from a portfolio-construction perspective. BHGG is a strong candidate for more sophisticated investors to own when balancing their portfolios. With Brevan Howard having further deepened its pool of trading talent, we believe the future for BHGG – by offering a broad exposure to these traders – looks bright.

Bull Bear
Strong performance in 2020 when equity markets have struggled, reinforcing the historical low correlation to equities and bonds Hard for investors to get a timely understanding of current exposure
Shares trade at a small premium to NAV, but are significantly cheaper (in terms of premium) than BH Macro’s
Discount volatility: NAV moves are not always reflected by the share price
Multi-strategy nature of underlying fund means BHGG can be used as a diversifier for equity portfolios
Shares can be relatively illiquid at times (reflected in spreads between buying and selling price)
Continue to Portfolio

Fund History

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10 Apr 2024 Results analysis: BH Macro
BH Macro rebounds in H2 of 2023…
14 Feb 2024 Fund Analysis
BHMG’s differentiated proposition is made yet more attractive given the 11% discount to NAV…
01 Feb 2024 Bring some yin-yang into your portfolio in 2024
Inherent contradictions within portfolios can give them stability in a polarised world...
01 Nov 2023 Back to basics
Higher rates mean re-visiting portfolio construction...
05 Oct 2023 Fund Analysis
BHMG’s proposition as a high-quality diversifier remains, yet it trades on a 11% discount to NAV…
18 Sep 2023 Results analysis: BH Macro
After a banner year in 2022, 2023 has proved more challenging for BHMG and a wide discount has emerged…
02 May 2023 Fund Analysis
BHMG’s premium has moderated, yet it continues to offer strong diversification…
06 Apr 2023 Results analysis: BH Macro
2022 was a banner year, but a negative month in March 2023 means BHMG’s premium has subsided…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
19 Oct 2022 Gimme shelter
Our analysts examine safe havens and defensive strategies as we endure the market's 19th Nervous Breakdown...
21 Sep 2022 Results analysis: BH Macro
BHMG had a strong first half to its current financial year…
16 Sep 2022 Fund Analysis
BHMG continues to prove its worth in portfolios...
22 Jun 2022 Spider's web
We outline our new quantitative system for mapping the crucial performance characteristics of investment trusts…
11 Apr 2022 Results analysis: BH Macro
After an eventful 2021 for BH Macro, 2022 has so far proven to be strong in performance terms…
26 Jan 2022 Fight or flight...
Two of our analysts debate the impact that war in Ukraine could have on investors' portfolios...
18 Jan 2022 Fund Analysis
BHMG’s hefty 8% premium reflects its unique qualities…
01 Sep 2021 Winter is coming
Summer was a welcome opportunity for exhausted investors to turn their backs on the legion threats they face, but they haven't gone away and the days grow short - we examine four in detail...
19 Nov 2020 Fund Analysis
BHGG continues to offer attractive diversification properties, particularly given elevated equity market valuations…
28 Oct 2020 Can the passives bull market continue forever?
We examine what the trend to passive investing means for active investment strategies…
19 Aug 2020 Has the time come for Europe?
With mutual eurozone debt established all eyes are on the continent once more; but what will drive relative returns?
01 Jul 2020 Oh the humanity...
We consider two strategies to cope with markets which, boosted by massive government support, may be witnessing the start of a ‘melt-up’ which may be followed swiftly by a melt-down...
18 Jun 2020 Challenge the status quo
We explain why diversification on its own is not a panacea for portfolio construction...
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
28 Apr 2020 Fund Analysis
Strong NAV performance in March crash means discount looks anomalous...
08 Apr 2020 Children of the Revolution
The outperformance of technology hints at an exciting possible future for the market when the virus is beaten…
30 Jan 2020 Is it time to run away?
With a sense of complacency in the air, our analysts debate the best ways to shore up your portfolio's defenses...
16 Jan 2019 There may be trouble ahead
We analyse why multi-asset macro funds have struggled and attempt to identify some possible closed-ended alternatives...
16 Jan 2019 Fund Analysis
Seeks to generate strong risk adjusted returns in all market conditions
09 Jan 2019 Fund Analysis
A feeder trust for the Brevan Howard macro hedge fund, which has seen resurgent performance in 2018...
View all

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The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
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