Absolute Return | Above MSCI World Index | Achieved with less Risk
AvantGarde produced gross returns of 51.37% in 2020 (reference portfolio, USD). This marks an excess return of 37.32% over the developed workd index, the MSCI World. and 35.12% over the S&P 500.
Long equity positions contributed with 34.64% the bulk of total return. Short equity positions added 7.56% and US 10-year treasuries, dividends and currencies 9.17% to returns.
The most profitable long positions in 2020 were Boeing and Carbios SAS, a French biodegration and biorecycling firm. On the short side, Schlumberger and American Airlines topped the list of the percentage gainers.
AvantGarde does not seek geographical or sector diversification. Instead, AvantGarde invests in a diversified portfolio of opportunities for profit in developed world companies. During its first year of trading, AvantGarde held a total of 42 long and 12 short equity positions and kept on and off portions of its assets in cash in various major currencies. AvantGarde invested in companies based in the US, Japan, France, Switzerland, Denmark and Norway among others.
At the beginning of the year, we judged the risk of a sudden drying up of private liquidity becoming a real probability again. AvantGarde started January with 54% long equity and 23% short equities. With the available cash we bought ten-year US treasuries.
The short positions, and also our US treasuries, produced such substantial profits that the excess return over the MSCI World and S&P 500 rose to 41.63% and 40.31% respectively in March. AvantGarde was up at one point 9.56% with the MSCI World down -32.07% and the S&P 500 -30.75%.
As we identified less and less opportunities for profit in short equity positions in April, AvantGarde's portfolio by mid-May had become increasingly long.
In the second half of May, by the time we realised most short positions, excess returns were around 26% and 23%. By the end of 2020, outperformance over the MSCI World and S&P 500 reached stead 37.32% and 35.12% resprectively.
The substantial increases in excess returns after May came from long equity positions.