Regal's Atlantic Absolute Return Fund posted a 14% rise in April, looking up from its -58.6% returns for March and -32% for February.
The fund, which invests in global stocks and aims to max returns regardless of market fluctuations, benefited from its healthcare stock picks and April's recovery in stocks, as S&P 500 Index returned rose 12.7% and MSCI World rose 10.8%.
Contributors to the fund's performance included regenerative medicine company Mesoblast which rose 143% in April on back of initial data relating to a COVID-19 patient trial.
Two other healthcare stocks, Medical Developments (up 42%) and Opthea (up 32%) were other positive contributors.
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Its detractors for the month came from its short book, especially cyclical and energy holdings.
Despite April's positive returns, the fund is still down 65.9% since the start of the year after accounting for March and February performance.
"Long-term bond yields continue to compress, equities remain inexpensive relative to bonds and ongoing volatility offers good opportunities to profit from short-term price dislocations. We are broadly avoiding overly cyclical businesses whose earnings are highly dependent on underlying economic growth and those companies exposed to the travel and aged care sectors," Regal said in its April update sent to investors yesterday.
"On the long side, we have increased exposure to companies across sectors we think will be relatively immune from the economic impact of the virus and where the market sell-off has provided good entry levels."
Last month, Regal said it was caught off guard by the COVID-19 volatility, and repositioned its portfolio during the month.
"The fund entered March with an elevated level of net exposure to the underlying market and a continued tilt on the long side to a number of smaller and mid-cap companies that have been significant contributors to the fund's 82% performance in 2019," it said last month.
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