Jim McGovern, CEO and Managing Director, Arrow Capital Management

FOCUS: North American Large Caps, ETFs & Macro Strategy

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MARKET OUTLOOK:

We continue to see growth slowing across the world largely due to secular trends. The central bank policies have created a boost in wealth but have failed to generate growth in income (GDP) and generally there has been a misallocation of capital. We are now waiting fiscal spending increases by governments that is, in our opinion inevitably coming, to try and make up for the lack of aggregate demand globally. Generally speaking we are short equities, long bonds and gold and the USD. The recent Brexit situation fits in with the continuation of our basic thesis. That being said, there are many tactical (trade) ideas to potentially exploit i.e. long winners / short losers type ideas.

Top Picks:

Albemarle (ALB.N)

This is our large cap pick in the lithium space. They are aggressively positioning themselves (via dispositions and acquisitions) as the go to name in the space looking to capture 50 per cent market share. Margins are growing and the company is one of only handful of institutional grade names to invest in lithium.

iShares TIPS Bond ETF (TIP.N)

This is an ETF that invests in US treasury inflation protection securities. The thesis here is this is a low volatility way to play slowing global growth (versus TLT or outright long government bonds) but with the optionality of the CPI (inflation) picking up the second half of 2016. 

iPath Bloomberg Grains Total Return Sub-Index ETN (JJG.N)

This is an ETN that is roughly 40 per cent soybeans, 37 per cent corn and 23 per cent wheat futures. This a secondary way to play reflation trade with diversification benefits (i.e. low correlation historically to equities) that agriculture can play in a portfolio. This has lagged badly relative to other commodities and technically looks very attractive.  

Fund Profile

Arrow Global Growth Fund – Class F

Performance as of: May 21, 2016

1 month: Fund 0.43%, Index* 0.56%

1 year: Fund 10.31%, Index*-3.96%

* Index: MSCI World NR USD

* Returns Net fees & dividends

Top Holdings:

1. Short* XIU ETF - 5.5%
2. Short* EWY ETF - 2.4%     
3. Barrick - 1.8%
4. ARGT ETF - 1.5%
5. Albemarle - 1.4%

Twitter: @arrowcapital @JimmyMcGovern

Website: www.arrow-capital.com