During the first half of 2015 DW Catalyst Fund’s NAV increased by 1.2% and 1.1% in the GBP and USD share classes, respectively. Over the same period the share prices of the GBP and USD share classes declined 2.2% and 2.4%, respectively.
They say the largest positive contributors for the first half of the year were within Commercial and Residential Real Estate positions, with select positions in their Corporate Performing portfolio also posting modest gains. Other strategies generated small positive performance through the first six months of the year, with the exception of the Distressed strategy, which saw losses in May and June in particular related to their energy positions.
Over the first quarter, US high yield bond prices rose from the lows reached in Q4 2014. Energy-related high yield bonds (the largest source of Q4 2014 market weakness) rebounded from their lows to such an extent, in fact, that they exited the tactical high yield energy long position that they initiated in December.
DW Catalyst’s Commercial Real Estate exposure increased slightly over the period (from 17% to
21%), this was the largest contributor to the Fund year to date, with the bulk of gains coming from legacy
CMBS positions. The re-emergence of CMBS issuance (on pace to reach $100 billion of issuance for the first time since 2007) has resulted in a number of the underlying borrowers in their deals being able to obtain new loans at par to take out existing loans, which has helped their mezzanine securities.
Corporate Performing and Corporate Structured strategies have also gained this year. Bespoke tranches were profitable in the Corporate Structured portfolio. On the Corporate Performing side, they saw gains in positions in longer dated cross-over bonds such as MeadWestvaco, Limited Brands, Liberty Interactive and Anadarko
position. Finally, market hedges and their small outright interest rate short positions gained over the period.
DWCG / DWCU : DW Catalyst’s gains on Real Estate offset by Energy exposure