DW Catalyst Fund Limited (the former BH Credit Catalysts) has reported results for the year that ended on 31 December 2014. Over the year the net asset value of the US dollar shares rose by 5.4% and the Sterling shares rose by 5.5%. DW Partners took on responsibility for the fund on 1 January 2015 so the performance for the year being reported on relates to Brevan Howard Capital Management. The transition has been amicable and smooth. The DW management team has been expanded and Brevan Howard have been assisting with elements of the fund administration.
DW report that there has been strong buying interest in the company’s shares and they are thinking about expanding the company.
Most of the good performance of the fund was recorded in the first half of the year. The best performing part of the portfolio was the allocation to residential and commercial mortgages, especially in residential put-back positions, monolines and CMBS. Residential mortgage positions contributed 8.2% for 2014 (2.8% of which came from monoline residential positions), and commercial mortgage holdings contributed 2.2% for the year.
Against that, the performing corporate long / short strategy did not work well and this cost the fund 2.7%. They were hit as prices of high yield bonds came off. The worst hit parts of this market were energy related bonds (as the oil price fell), they say they had a relatively small exposure to this area of the market. They do see opportunities in this area for the future as some of the issuers become more distressed. Exposure to Korean preference shares was also unhelpful as was the interest rate hedges they put in place.
DWCU / DWCG : DW Catalysts has difficult second half, high yield exposure weighs