Monthly Letter February 2016

A er the very tumultuous start in January, the equity markets calmed down ever so slightly in February. The EuroSTOXX50 was down a li le bit more than 3%, the S&P 500 was close to the unchanged mark and the Swedish equity index (OMX) was marginally posi ve with +1.2% for the month. Mid-month the picture was a lot grimmer though. The three indices were all down be- tween 6% and 12% at the low point, only to recover towards the end of the month.

Madrague showed a small posi ve return for the month of February, +0.15%, which brings the year to date gure to -4.95%. The intra-month vola lity caused us to con nue reducing our gross exposure. Our value-at-risk was more or less unchanged, which gives an indica on to the increased risk (vola lity) in the market at the moment. We do not agree when someone says that the risk in the market is higher when the market has fallen (if you are a long investor). The risk (at least ex-post) was higher when the market was less vola le before it fell. Anyway, as we manage capital with the goal of long term returns, we adjust our gross exposure when vola lity adversely a ects our returns. We do, however, enter into posi ons when vola lity is high and we see a normalization of valua ons in a not too distant future.In January we had unusually small di erences in performance between our sectors, less than 1% between Technology on the posi ve side and Construc on on the nega ve side. The di erences between di erent sectors in Europe, on an index level, were massive though.

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