Highlights This Month
- The S&P 500 has been driven higher by growth stocks and technology in particular.
- The Russell 3000 index is a better indicator of the general domestic US economy.
- The two main drivers for the markets right now are global recovery and government action.
- Americans are still scared, and a scared consumer is not a good consumer.
- Fiscal and monetary policy continues to keep the markets strong.
- China and its relationship with the US is going to be a key issue for the global economy and markets.
Nicola Wealth Portfolio
Returns for the Nicola Core Portfolio Fund were +1.0% in the month of May. The Nicola Core Portfolio Fund is managed using similar weights as our model portfolio and is comprised entirely of Nicola Pooled Funds and Limited Partnerships. Actual client returns will vary depending on specific client situations and asset mixes.
The Nicola Bond Fund returned 1.6% in May. The Nicola Bond Fund returns continue to march forward as credit spreads narrowed, led by the energy sector, which benefited from a recovery in oil prices as WTI moved from $21.85 to $35.49 during the month. Other cyclicals and lower rate securities also outperformed. Downgrades have slowed but there still remains a considerable number of companies on negative watch.
That being said, we remain constructive in the investment grade space. The Fed initiated their program of buying credit ETF’s in May and Canada has started a program to buy corporate bonds directly in the secondary market. Canada will buy up to $10B over the next year, providing psychological support for market participants in the process.
The Nicola High Yield Bond Fund returned 2.0% in May as the high yield market continued moving higher despite significant new issuance volume. Energy and home builders had a strong month off of the strength of the oil price recovery and housing numbers. There are a growing number of distressed names in high yield with energy defaults picking up to 11% while recovery rates are lower. Despite this, higher quality high yield is now flat for the year. More defaults are likely to come to COVID-19 related industries while safe sectors in high yield appear to have compressed too tightly.
The Nicola Global Bond Fund was up 1.2% for the month. Templeton Global Bond was flat for the month maintaining defensive posturing with safe haven currencies and select shorter dated paper. Concerns remain on the combination of the global economic slowdown and Covid-19 hitting emerging markets with less robust healthcare. Argentina missed an interest payment extension on May 22nd and is now in default.
The government has been in discussion with creditors to restructure debt and is likely to improve their proposal to try to reach a deal within the next month. The discussion has largely focused on Argentina’s USD denominated debt which accounts for the lion’s share of their overall debt. Templeton’s exposure is focused on local currency debt. A portion of this debt was due to mature this year and was exchanged for longer termed assets that are linked to inflation. Pimco had strong returns for the month and is positioned for an uneven economic recovery believing bond yields to be likely range-bound.
The strategy remains bar-belled, reducing duration which is less attractive and increasing US Agency mortgage backed securities for safe assets while investing in senior non-agency mortgage backed securities, select corporate credit in both investment grade and emerging markets while becoming slightly more cautious on the high yield market.
The returns for both the Nicola Primary Mortgage Fund and the Nicola Balanced Mortgage Fund were +0.3% and 0.4% respectively in May. The economic impacts of COVID-19 have affected four loans in the Nicola Primary Mortgage Fund and five loans in the Nicola Balanced Mortgage Fund, with payment relief being considered and granted on an as needed and individual basis.
We have begun considering new loans, although no new loans have been approved for funding. Current yields, which are what the Nicola Primary Mortgage Fund and the Nicola Balanced Mortgage Fund would return if all mortgages presently were held to maturity and all interest and principal were repaid, and in no way is a predictor of future performance, are 4.1% for the Nicola Primary Mortgage Fund and 5.7% for the Nicola Balanced Mortgage Fund. The Nicola Primary Mortgage Fund had 13.5% cash at month end, while the Nicola Balanced Mortgage Fund had 11.6%.
The Nicola Preferred Share Fund returned -2.9% for the month while the BMO Laddered Preferred Share Index ETF returned -2.0%. The market took a breather from the strong recovery as investors looked to take some near term profits with low volume trading throughout the month. The S&P updated their views on the impact of COVID-19 on the Canadian banks with the agency willing to provide breathing room for the banks in terms of their ratings as banks generally reported misses with higher credit losses.
DBRS revised outlook on Fortis to positive, if they maintain their current profile and stable credit metrics, Fortis’ credit could be upgraded. The recovery of Brookfield Asset Management has lagged the markets likely due to its relationship to Brookfield Property Partners. During May we purchased more preferred shares from both issuers during the month due to relative valuations.
The S&P/TSX was up +3.0% while the Nicola Canadian Equity Income Fund was +0.7%. The largest positive contributing sectors to Index returns in May were Information Technology and Energy. All of the TSX sectors were in positive territory except for Real Estate which was slightly negative. The underperformance of the Nicola Canadian Equity Income Fund was mainly due to being underweight in Technology where Shopify in particular has driven returns, and also being overweight in Real Estate. The top positive contributors to the performance of the Nicola Canadian Equity Income Fund were Wheaton Precious Metals, Interfor and Enbridge. The largest detractors were Pinnacle Renewable Energy, Air Canada, and Allied Properties. We added Kinaxis and Boardwalk REIT in May. We sold NFI Group.
The S&P/TSX was up +3% while the Nicola Canadian Tactical High Income Fund underperformed with a return of +1.7%. The Nicola Canadian Tactical High Income Fund does not have any exposure to Information Technology which was a strong performer in May and that hurt relative performance.
The Nicola Canadian Tactical High Income Fund benefited from a bounce back in Financials and Energy. Currently, we view the opportunities in the Nicola Canadian Tactical High Income Fund as very attractive as volatility remains elevated and as a result we feel that we can generate strong returns and income from the portfolio with our option writing strategies. The Nicola Canadian Tactical High Income Fund has a Delta-adjusted equity exposure of 78% and the projected cashflow yield on the portfolio is over 10%. In the month, we added Brookfield Asset Management and Boardwalk REIT to our portfolio and sold NFI Group.
The Nicola U.S. Equity Income Fund returned +5.3% vs +4.8% for S&P 500. For the second month in a row all sectors were in the green last month with cyclicals leading the way in the back half of the month. The Nicola U.S. Equity Income Fund’s performance was driven by select stocks within Consumer Discretionary (Dollar Tree, Lowes & Tractor Supply all gained 20%+) and Info Tech (Nvidia +21%).
The Nicola U.S. Equity Income Fund took advantage of heightened volatility by writing six covered-calls with 24.5% premium (annualized) with 8% upside. The Nicola U.S. Equity Income Fund ended the month 18% covered. The delta-adjusted equity exposure is 89% and the current annualized cashflow is 5.3%. New positions were initiated in Amazon and American Express. We also added to existing positions in Waste Management, Procter & Gamble, JP Morgan, Citigroup, United Healthcare, Verizon, M&T Bank, and Apple. The Nicola U.S. Equity Income Fund sold the full position in Estee Lauder (funded Amazon trade) and also trimmed back our gains in Microsoft and Tractor Supply Co.
The Nicola U.S. Tactical High Income Fund returned +4.4% vs +4.8% for S&P 500. The Nicola U.S. Tactical High Income Fund had strong performance in the latter half of the month as cyclical names outperformed. In fact, three of the Nicola U.S. Tactical High Income Funds’ names made the top 10 best performing stocks in the index last month (L Brands was the best performer in the index).
The Nicola U.S. Tactical High Income Fund ended the month having 43% of long positions covered. Four call options were written with 15% upside and 20% annualized premiums. Put options actively picked up with 19 options written which were on average 14% out-of-the-money generating 12% annualized premiums. The markets option volatility continues to decline to levels last seen in late February 2020, but still high relative to pre-covid levels. The delta-adjusted equity decreased from 69.5% to 64.6%.
The Nicola Global Equity Fund returned +2.5% vs +3.5% for the MSCI ACWI Index (all in CDN$). The Nicola Global Equity Fund slightly underperformed the benchmark due to being underweight in the U.S. and overweight in developed Asia. From a sector level, the Nicola Global Equity Fund benefited from being overweight industrials; however, the underweight in information technology and overweight in consumer staples detracted from performance.
Global cyclicals and small cap came roaring back in the second half of May which lead to solid performance from our small cap manager. Performance of our managers in descending order was Lazard Global Small cap +5.7%, Edgepoint Global Portfolio +3.7, Pier 21 Worldwide Equity +3.3%, NWM EAFE Quant 2.6%, Pier21 Global Value +1.4% (70% exposure to Consumer Staples & Healthcare and close to 48% USD$ & Yen), BMO Asian Growth & Income -0.5%.
The Nicola Global Real Estate Fund return was -0.3% in May vs. the iShares S&P/TSX Capped REIT Index (XRE) -2.2%. We see good value in the publicly traded securities with many REITs showing an attractive discount to NAV calculations. We have been increasing our allocation to the REITs in the Nicola Global Real Estate Fund and now have a 27% weighting to publicly traded securities.
The performance of the REIT Universe in April and May has lagged the TSX by a wide margin. Recovery in investor sentiment will take time and is likely tied to the reopening of the economy and recovery in employment. Currently the focus is on monthly rent collection where the apartment REITs have been performing well and the retail REITs have been challenged. There were no new additions or subtractions in the month.
The Nicola Sustainable Innovation Fund returned +3.7% (USD)/ +2.5% (CAD) in May and has returned -0.3% (USD)/ +5.7% (CAD) year-to-date. Ameresco, Vestas Wind Systems, and TPI Composites were the top contributors to performance. Pinnacle Renewable Energy, BYD Co. and Xylem detracted the most from performance during the month.
In May we topped up existing positions in American Water Works, Alstom, Innergex, and Xebec Adsorption while we trimmed part of our position in TPI Composites after they reported strong earnings. We also added a new company to the portfolio, Itron. Their products and services include technology solutions related to smart grid, smart gas and smart water that measure and analyze electricity, gas and water consumption. These devices include energy management, control, and measurement solutions for utilities and other customers as well as software for improved connectivity and communications.
The Nicola Alternative Strategies Fund returned 1.0% in May. Currency detracted -0.8% to returns as the Canadian dollar continued to rebound and strengthen through the month. In local currency terms since the funds in the Nicola Alternative Strategies Fund were last priced, Winton returned -4.1%, Millennium +2.3%, Renaissance Institutional Diversified Global Equities Fund -7.0%, Bridgewater Pure Alpha Major Markets +2.0%, Verition International Multi-Strategy Fund Ltd +3.7%, RPIA Debt Opportunities +8.5%, and Polar Multi-Strategy Fund +3.5%. Despite volatility subsiding, dispersion amongst difference strategies remains high. Throughout the past couple of months, RPIA has increased liquidity and improved the quality of the portfolio. Despite a more defensive posturing, they have been able to achieve strong returns as credit spreads tightened. Winton focuses on following trends in the marketplace and the sharp marketplace reversal have hurt returns. Profits from agriculture and fixed income were negated by loses in the equity markets as stocks rebounded.
The Nicola Precious Metals Fund returned 6.3% for the month while underlying gold stocks in the S&P/TSX Composite index returned 2.0% and gold bullion was up 1.3% in Canadian dollar terms. While gold prices are not yet at the peak levels of 2011, industry profitability is at record levels. The current environment has seen gold prices move higher while costs have been flat or lower. With macroeconomic policy supportive and companies more disciplined, we expect gold to remain a highly profitable sector over the coming years.
The relative outperformance for the Nicola Precious Metals Fund came from stock selection predominately in the small and mid-cap space. Endeavor Mining, K92 Mining and Freegold Ventures had strong months. Freegold is a small gold exploration company with mines in Alaska. New preliminary drilling results came back positive and show that there is a potential that the vein system may extend further.
May in Review
The markets in May were not as strong as April, but the rally coming off the March 23rd lows remained firmly intact last month with the S&P 500 +4.8% and the S&P/TSX up just over 3.0%. The S&P 500, in fact, traded above its 200 day moving average in late May for the first time since the beginning of March. Since March 23rd, the S&P 500 has climbed 36.6% and as of the end of May, is down only 5% year to date.
The S&P/TSX has returned a nearly equivalent 36.3% since March 23rd but is still down 9.7% year to date. The S&P/TSX has retraced about 63% of its COVID-19 decline (Feb 20 to March 23) while the S&P 500 has made back about 66% of its losses. Most asset classes, in fact, have had recoveries of between 50% to 70%, with the exception of oil and emerging markets.
The S&P 500 has been driven higher by growth stocks and technology in particular.
The top five stocks in the S&P 500 are Apple, Amazon, Microsoft, Facebook, and Alphabet (Google), and as a group make up 20% of the entire market capitalization of the index, a higher concentration of the five largest stocks in the index than during the tech bubble of the late 1990’s. As a group, these leaders are up about 15% year to date versus the S&P 500 which is down about 5%.
Without these five stocks leading the way, the S&P 500 would be down 8% year to date. Lack of market breadth can be a negative signal if fewer and fewer stocks are holding up the overall market. The same can be said for growth stocks and the economy. Investors traditionally bid up the price of companies able to consistently grow earnings if there are fewer and fewer such companies to be found.
This has been particularly the case during the pandemic as the sudden collapse of economic growth has left most companies searching for earnings of any kind, let alone growth. Technology stocks have been one of the few exceptions, especially given most benefit from the work from home shift by most workers.
The Russell 3000 index is a better indicator of the general domestic US economy.
From this perspective, the rally in the S&P 500, and the NASDAQ in particular, is a less positive barometer for the economy if the broader market continues to lag. The Russell 2000 is comprised of the smallest companies in the Russell 3000 index and is a better indicator of the general domestic US economy. The Russell 2000 fell just over 40% during the COVID-19 sell off and has been slower to recoup its losses, having retraced only 57% by the end of May. The Russell 2000 ended the month strongly, however, and nearly matched the NASDAQ for the month by increasing 6.5%. This is a positive sign for the economy, but market leadership still remains a point of concern.
We suspect the market has been driven higher by short covering.
We find It interesting that sentiment, while improving, still remains quite bearish,with many traders actually short the market. A short seller needs to eventually buyback what they have sold, thus providing future buying demand. As the marekt moves higher, short sellers come under more and more pressure and start to unwind their position, providing further fuel to the rally. Also, even though the rally has been strong, there is still a lot of dry powder in the form of cash waiting on the sidelines. As the rally continues, this dry powder will start to be deployed.
Is the market event and news flow driven?
We say all this because we are finding it harder and harder to rationalize why stocks and risk assets in general continue to move higher. Rather than fundamentals, this market appeared to be event and news flow driven, but as can be seen in the exhibit below from RBC Capital Markets, news flow last month was on balance and has been more negative.
In fact, the only positive news reported by RBC was vaccine data from Moderna and the reopening of five New York regions in mid May that was sandwiched between mostly negative news the rest of the month.
We are going to go into more details below, but rather than skip forward to the last paragraph to see how this monthly comment ends, we are going to give you the conclusions up front. Doesn’t mean you shouldn’t continue reading to the end, however, because we hope to fill in some important gaps.
The two main drivers for the markets right now are global recovery and government action.
There are only two main drivers for the markets right now, namely how quickly global economies are able to normalize, and what governments are able to do to make up the difference in the mean time. COVID-19 treatment options (like vaccines), US/China relations, and the November US election are interesting and have the potential to influence the economy and the markets at some point, but they are not what drove prices higher last month.
One factor we know wasn’t driving markets higher last month was the global economy.
It continues to be down right terrifying in both the speed and magnitude in which it has declined. Manufacturing has recovered somewhat in China, but most economies continue to experience a contracting industrial sector. Even China has acknowledged it is facing an uncertain future in the near term, deciding not to issue a formal GDP target for first time in 25 years. According to GaveKal 60 to 100 million workers may be out of work in China, representing 11-20% of China’s total non-farm workers.
The US job market has also suffered due to the lockdown.
While there are different ways to measure the carnage, the conclusions are the same, a large number of Americans were not at work last month. Continuing jobless claims in March and April totaled 21.4 million, and an additional 8 million are expected in May, bringing the total to nearly 30 million. Cumulative claims total over 40 million.
According to a recent WSJ article, economists forecast that the unemployement rate is estimated to hit 19.8% in May while Goldman Sachs believes it could peak at 25% (as it turns out, 2.5 million jobs were added in May instead of 8 million being lost, and the unemployment rate fell to 13.3%, but more about that next month). According to the Labor Depratment, 88% believe their layoff will be temporary and they’ll be back to work within six months, Oxford Economics thinks otherwise, believing 50%, or at least 10 million workers, won’t be going back to their old jobs. This is roughly equivalent to the same number of permanent job losses during the 2007-9 great recession.
The longer workers stay home, the more likely Oxford Eoncomics will be right, as companies will need to reduce costs or close up shop all together. Preseident Trump understands this and is desperate to restart the economy as quick as possible and get America back to work.
In order for the global economy, and the stock marekt, to continue its recovery, global lockdown intensity must decline. The question is whether the US has seen infection rates slow enough to reduce social distancing measures, and how much can they ease restrictions without risking a seocnd wave of infections? It’s a bit of a gamble, but so far so good. In states with more mobility, infections remain under control.
While we are coming off a low base, there are signs America is starting to open up, which has not gone unnoticed by the market. More people are travelling by air and eating in restaurants, and according to Gallup, fewer are avoiding public places and small gatherings.
An optimist would point out consumers have been cooped up at home and are waiting to spend money. With the lockdown, the only thing people were able to buy were the necessities, food and household products, and their bank accounts are flush. They have enough toilet paper to last a few pandemics, with the lockdowns coming to an end it’s time to start enjoying life again.Eat out, go on a trip, take in a ball game, or maybe work off some of those extra pandemic pounds at the gym.
Americans are still scared, and a scared consumer is not a good consumer.
The problem is, however, Americans are still scared, and a scared consumer is not a good consumer. On average, Americans believe COVID-19 will have a longer impact on their lives than they though in March or April, with many not planning to resume normal activities for at least a few months after the government has signaled the all clear. A recent Harris Polling survey, in fact, found 27% don’t expect to fly and 30% won’t go on a cruise for at least a year. Perhaps more damaging to local economies, 21% will avoid sporting events and 16% will avoid the gym. While President Trump isn’t worried about a second wave, according to a recent Washington Post-ABC News poll, over two thirds of Americans are. Not surprisingly, 50% of Americans have reported feeling depressed, versus only 25% before the pandemic.
Social distancing measures will continue to ease and we will get back to more and more of our normal routine, but without a vaccine or breakthrough treatment options we won’t get all the way back to normal. How many restrictions can be relaxed without triggering a second wave? The truth is no one knows. If you listen to the Health authorities, they will advise erring on the side of caution. If you ask a President seeking re-election this November, well he may be willing to take a few more chances. Regardless, it won’t be a 100% open economy, maybe it will be 90%. But what does a 90% economy look like? Well it’s not a V shaped recovery. It might not even be a U shaped recovery. It’s certainly not what the market is presently discounting.
So what about a vaccine or other treatment options?
Again no one knows. A number of companies are making good progress on developing a vaccine, with the White House announcing in early June five candidates with the highest chance of success now eligible for additional government funding. A handful have even started human trials, with hopes a vaccine could be widely available early next year.
Many experts feel this timeline is widely optimistic. With over 100 vaccine candidates under development, a key challenge will be to find an appropriate population to run trials on. If we are successful in flattening the curve, it’s going to make testing vaccines on at risk patients more challenging. It would be nice if we could have a globally coordinated effort, but it looks like the quest for a vaccine is turning into a global competition, especially between the US and China.
As for treatment options, two early candidates that the markets (and President Trump) were excited about, Hydroxychloriquine and Remdesivir, now look to be duds. Remedsivir could provide marginal benefits, but it’s certainly not a game changer. Too bad, we had finally learned how to pronounce them. Still working on the spelling.
Overall, we are hopeful a vaccine will be successful, but the timing could disappoint. In fact, the other risk to vaccine developers is likely to be that we get a treatment option first, making the vaccine redundant. As for the six month timeline, we’ll take the over on the over/under bet.
Fiscal and monetary policy continue to keep the markets strong.
All this seems pretty negative for the economy, given a full return to normal is unlikely in the short term. So why is the market so strong? Fiscal and monetary policy. The US Federal Reserve has stepped in to provide as much liquidity as the market needs, while the Federal government and Congress have provided over $3 trillion in aid to prevent any liquidity issues from the central banks that could turn into a solvency issue.
A near term concern is that fiscal aid was only intended to bridge a gap in the economy of about three months and will need to be reloaded soon. Congress was very quick in coming together with bipartisan support early in the pandemic, but politics are starting to come into play on the next aid package. Democrats want another round of stimulus checks and they want enhanced jobless benefits to be extended beyond the end of July.
The House of Representatives actually passed a $3.3 trillion package a few weeks ago, but Republicans balked. Remember what President Trump wants, he wants America to go back to work. If the unemployment rate is 20% in November, he joins the ranks of the unemployed. Republicans want to incent and encourage people to go back to work, and they want employers to be legally protected if returning workers get sick. With additional unemployment benefits, a typical worker is actually making more than when they were working. Hardly an incentive to go back to work and risk getting infected.
Republicans see a package of around $1 trillion, but they are less motivated than Democrats in making it easy for workers to stay home. A deal will be made, because a deal needs to be made. Some have floated the idea of a back to work bonus that might make both sides happy? Overall, unlimited monetary stimulus and the corresponding fiscal response helps the market believe a recovering economy is worth waiting around for.
So how about some of the other issues hitting the headlines last month?
The biggest was the renewed tensions between the US and China. While certainly a long term concern, we discount the short term risk given both countries ultimate preoccupation is with their domestic economies. President Trump’s actions are hard to understand at the best of times, but we work form the premise that his number one goal is to get re-elected and everything he says and does is to achieve this.
It’s bad for the US economy if the trade deal he negotiated last year falls apart and tariffs are put back in place. Yes he is trying to blame the pandemic and ensuing recession on China, but only if it looks like the economy is beyond repair by November, and he is headed to defeat, will he take the more risky path of provoking a broader conflict with China in to divert attention away from the economy.
Last months reaction to China’s new Hong Kong National Security legislation and the US claims Hong Kong can no longer be deemed autonomous is mostly politics. Trump stayed mainly silent during the Hong Kong demonstrations earlier in the year, so why is it a big deal now? Trump is also not happy with the way China handled the COVID-19 outbreak and the WHO’s cozy relationship with China, but he praised China’s proactive measures early in the outbreak. It’s all politics, and the market doesn’t care, for now.
China is no longer seen in the US as an emerging economy, it’s seen as an economic rival and threat. For its part, China sees the US as a declining power, which China aims to replace.
Trump may have been the one to turn the spot light on China, but there is now a bipartisan anti China view in Washington, and with the American people. According to a poll by FTI Consulting, 40% of Americans won’t buy a product if it is made in China. Or at least if they know that it is made in China.
The US is also getting serious about ensuring it maintains its technology lead over China. Called the National Frontier Act, new legislation in the US would allocate $20 billion a year to build new research centers around the country in order to “jump start” breakthrough science that can revive economic growth and the American dream. Yes, this is also just politics, but it shows Congress is getting serious with its view on China.
The other big event with potential to upset the markets is the presidential election this November.
As we mentioned, it’s the only thing Trump really cares about. Biden is leading, and there is even a chance Democrats could make a clean sweep and take the Senate as well. Trump’s refusal to wear a mask is hurting his cause. Not so much because voters see this as mis-guided, but a mask would hinder his ability to speak, though he could still tweet.
Biden, on the other hand, has been wearing a mask, which helps him given he has a history of making the odd gaffe or inappropriate comment. He might win by just standing in the wings. A Democratic sweep would be bad for markets, but won’t start to be discounted by traders until later in the summer. Either way, as long as the Federal Reserve keeps pouring on the liquidity and Congress keeps spending, the market should remain happy. The key risk is infection rates and whether they turn higher as the lockdowns are eased. But even this might not deter traders. We remain cautious. A little perplexed, but cautious none the less.
This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information presented here has been obtained from sources believed to be reliable, but not guaranteed. Returns are quoted net of fund/LP expenses but before Nicola Wealth portfolio management fees. Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Please speak to your Nicola Wealth advisor for advice based on your unique circumstances. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities’ commissions. This is not a sales solicitation. This investment is generally intended for tax residents of Canada who are accredited investors. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. For a complete listing of Nicola Wealth Real Estate portfolios, please visit https://realestate.nicolawealth.com. All values sourced through Bloomberg. Effective January 1, 2019 all funds branded NWM were changed to the fund family name Nicola. Effective January 1, 2019, the Nicola Global Real Estate Fund adopted a new mandate and changed its name from NWM Real Estate Fund.