Headland Global Diversified Fund
Fund Overview
The Global Diversified Fund is designed for investors seeking capital growth and an alternative to traditional assets such as equities and bonds. Since inception the Fund has provided an annualized return of 6.3% and has outperformed the ASX200 index by 36%.
The following chart shows the performance of the Global Diversified Fund relative to the ASX200 index.
Investment strategy
Economic cycles and structural changes to the global economy cause asset prices to trend over time. Headland utilizes sophisticated quantitative models to identify long term price trends across a diverse range of assets.
Assets exhibiting strong trends are combined into an investment portfolio. The portfolio is constructed so as to maximize the benefits of diversification.
Proprietary risk management tools are used to monitor the investment portfolio. Capital protection and avoidance of extreme volatility are key components of the risk management process.
Portfolio construction
The investment portfolio is selected from a broad range of asset sectors which include;
Global Fixed Income – Sovereign Bonds from the US, Europe and Asia Pacific.
Major Currencies - USD, JPY, EUR, CHF, AUD, NZD, CAD.
Major Commodities – Energy (oil & gas), Metals (precious & industrial), Agricultural (protein & carbohydrates)
The Fund has no exposure to equities or emerging markets.
Portfolio diversification is achieved by investing across a broad range of assets. The chart below shows the current portfolio allocation across various sectors.
More information on our portfolio construction process is available here.
Risk management
Headland places a large emphasis on capital preservation. The Fund employes an innovative risk management process devised to minimize drawdowns whilst maintaining sufficient market exposure to achieve the Fund’s investment goals. The risk management process covers the following specific areas;
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Diversification - Assets are selected from a variety of investment themes. This adds diversification to the portfolio which helps to reduce draw downs.
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Volatility Forecasts – A quantitative model is used to estimate the likely range of daily price movements. The model reduces exposure to assets exhibiting higher volatility. Position size is scaled to keep the portfolios volatility constant.
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Extreme volatility - The models recognise that price range is not normally distributed. Volatility stops reduce exposure to large one day moves.
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Maximum portfolio losses - Loss limits over specific time intervals are applied at a portfolio level in order to slow the erosion of capital during periods of negative return.
Liquidity and transparency
Investments are made using Exchange Traded Derivatives (Futures) on the underlying assets. Only assets which trade in large volumes on well franchised public exchanges are selected for the investment universe. This ensures the investment portfolio provides both liquidity and transparency.
Liquidity means that there is a large volume of daily transactions in the underlying asset. Should an investor need to redeem their investment, assets can be easily sold at short notice.
Transparency means that valuations are derived via an independent third party exchange on a daily basis. This provides investors with a reliable marked to market valuation of their investment on a regular basis.
Compliance
Headland has developed an institutional quality internal compliance capability. This ensures that the quantitative investment process is followed consistently without deviation. The portfolio is monitored in real time and independently reviewed by a dedicated compliance committee.