December came and closed out a year full of political surprises that moved markets, from Brexit to Donald Trump’s election. The Federal Reserve (Fed) raised US interest rates for the first time in a year in an entirely unsurprising move, however there were still unexpected nuances in the forward guidance for 2017 both from the Fed and the European Central Bank (ECB). More of a surprise perhaps was the OPEC organisation’s announcement that an agreement had finally been reached with non-member countries, including Russia, to cut production and help support oil prices. Equities rallied in Europe, yields rose in the US and the dollar was broadly stronger. The Fund profited from moves in stocks, currencies, credit and bond markets and was dragged back by metals, ending the month up +1.58% net-of-fees. This brought performance over a relatively challenging year to -7.55% net-of-fees. The ECB’s extension of the bond purchasing programme helped calm markets and European equities had their best month in the year with the German Dax index up nearly 8%. Long positions in Australian and European indices led performance along with sector basket exposure to European material and capital goods stocks. The rally wasn’t all positive for the Fund though and short positions in European media and telecommunication stocks suffered offsetting losses. Credit markets reacted positively over the period with tightening in both the US and Europe. Short protection swaps on the higher yielding European cross-over index particularly benefitted as spreads fell nearly 15%. In currency trading the Fund saw profits from markets such as South Korea, Australia and Turkey as the US dollar strengthened, although volatility through the month in Canadian and New Zealand dollars caused turnover without the positive returns. The Fund’s net direct exposure to oil through December was low, so that performance from energy trading was close to flat over the period, being buoyed slightly by long heating oil and gasoline exposures and dragged by volatility in UK natural gas trading and short positions in carbon emissions. It was trading in metals that drove most of the commodity losses for the Fund, with a near 15% reversal in the price of palladium following year-long highs at the end of November, contributing the most. Bond trading has become pleasantly dispersed over the later part of the year, with Fund positions being generally short in the US and Canada and long in Europe particularly through German bunds. In December, the Fed rate rise and forecasts of further hikes in 2017 helped push 10 year US yields up from below 2.4% to nearly 2.6% before falling back towards the end of the month. As a result small gains were made on most positions with a few exceptions like Japan and Korea.