- In Q3, the Picton Mahoney Fortified Income Fund returned 3.24% (Class F) and the Picton Mahoney Fortified Income Alternative Fund returned 3.85% (Class F) which outperformed the blended benchmark composed of 75% ICE BofAML Global High Yield Index / 25% ICE BofAML Global Corporate Index (TR) (Hedged to CAD). Several special-situation investments contributed to the outperformance, including our Canadian and global bank positioning and M&A related opportunities.
- The quarter enjoyed continued strong performance in most risk assets as the global economy began to adapt to life with COVID-19. Financial markets started pricing in the possibility of a return to normal, given promising data on several vaccine candidates.
- While the timeline of the recovery remains uncertain, with governments committed to fiscal stimulus and central banks supporting the market via asset purchases, we believe credit remains an attractive asset class. However, valuations are getting stretched, and bifurcation is emerging. We are also becoming increasingly cautious about longer-dated bonds, as we see unprecedented fiscal deficits and government bond supply combined with a forward outlook that could be quite inflationary in a return to normal scenario.
- We continue to be active, both long and short, with our team focused on finding stable income investments and attractive idiosyncratic event-driven situations while keeping credit and interest rate hedges in place to mitigate against potential volatility (e.g. U.S. election, virus/vaccine uncertainty, geopolitical risk, etc.).
For the funds’ full performance, visit www.pictonmahoney.com.
This material has been published by Picton Mahoney Asset Management (“PMAM”) on October 23, 2020. It is provided as a general source of information, is subject to change without notification and should not be construed as investment advice. This material should not be relied upon for any investment decision and is not a recommendation, solicitation or offering of any security in any jurisdiction. The information contained in this material has been obtained from sources believed reliable, however, the accuracy and/or completeness of the information is not guaranteed by PMAM, nor does PMAM assume any responsibility or liability whatsoever. All investments involve risk and may lose value.
Commissions, trailing commissions, management fees, performance fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Alternative mutual funds can only be purchased through a registered dealer and are available only in those jurisdictions where they may be lawfully offered for sale.
There is no guarantee that a hedging strategy will be effective or achieve its intended effect. The use of derivatives or short selling carries several risks which may restrict a strategy in realizing its profits, limiting its losses, or, which cause a strategy to realize or magnify losses. There may additional costs and expenses associated with the use of derivatives and short selling in a hedging strategy.
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