NAV: 429,379.57
Total Shares Outstanding: 415,961
NAV per share: 1.0323
Performance since inception: 2.48%

Yet another interesting month in August albeit less volatile. US has largely stopped firing at Iran because due to dwindling munition, and opted for economic strangulation instead. Scott Bessent announced in late August economic D-day for Iran, and threatened to cut off any countries/companies from accessing US financial system and trading in US dollars should they be caught having economic relations with Iran. China has outright rejected this secondary sanction, and the market has largely shrugged it off as Bessent did not specify a timeline for implementation. I also don’t think he will do it because it would be disastrous for the US if countries stopped using the USD.

Speaking of currency, we also saw currency intervention by US and Japan to prop up the Yen as it has been declining since 2025, the last time US did any sort of Yen intervention was in 1998. Trump said that the intervention was “a signal of friendship”, but we can all see what he likes to do to his friends and allies, like the trade war with Canada, attempted acquisition of Greenland, asking South Korea to help out with the Iran war, and most of all pulling the Gulf countries into this war of choice. So I don’t it’s because of friendship. The more likely reason is to stop Japan from selling their US Treasuries holding to fund the yen buy back, which would be catastrophic for the US government future cost of borrowing. We can see this because when Bessent did the Yen buyback, he didn’t do it with US money, he did it with Euro denominated bonds! That’s right, selling Europe’s bonds to buy Japanese Yen, causing European market yields to soar. All without consulting their EU counterparts beforehand and yet another example of how this administration likes to kick its allies in the teeth.

Speaking of intervention. The US Treasury has also announced buying back its own long term bonds to suppress yields, by issuing short term bills to fund it, essentially turning a fixed rate loan into a floating rate loan. The US 30year yield reached an eye watering 5.31% in August, caused by a combination of sustained higher inflation, massive amount of government debt which surpassed USD$40 trillion dollars, and also potentially from the massive issuance of bonds from the hyperscaler which crowded out Treasuries. Such intervention is a signal that the Treasury is in trouble and I think likely to invite bond vigilantes to test the debt of the government’s wallet.

Its almost 1 year since the start of our investment and I have to say I’m not particularly happy about the results. I think the most crucial part of this year was the decision to switch to monthly rebalancing, which completely missed the rebound in April. Back then, the issue was to reduce trading cost from frequent trades, however that has backfired. I’ve since implemented threshold guardrails to prevent small trades and have remove the number of underlying in the portfolio, which should alleviate some cost pressure and we should be increasing trading activities.

That said, I’m contemplating with the idea of changing to UCITS funds, these are funds registered in EU and have 2 obvious cost advantages relative to US domiciled funds. Firstly, UCITS funds has a 15% US withholding tax compared to 30% for US domiciled funds. Secondly, the expense ratio of the funds seem to also be lower than their US domicile counterparts. The major disadvantage has to do with the transaction cost of the exchange, NYSE charges minimum USD$1 per trade, while LSE charges USD$4-6 per trade, significantly more expensive. Therefore, if we were to switch to UCITS funds, the strategy would be steer towards less trading and focus on portfolio allocation. Less trading means more cost reduction, and holding funds with lower expense ratios and less withholding tax means less of our returns get taken away, which is a huge plus and attractive in my opinion. I’ll continue to monitor the situation and update you on my decision in the future.

August’s factsheet can be downloaded here.