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Alternative Market Briefing

The Corona Fighters Report 41: Asset managers who delivered in the downturn

Monday, June 08, 2020

Bailey McCann, Opalesque New York:

This is our regular report on hedge funds and alternative asset managers who are successfully protecting assets and outperforming the markets during the first months of 2020.


An impact strategy outperforms

AlphaThorn's Secured and Enhanced Programs were both up in the first quarter. AlphaThorn Secured was up 2.17% and AlphaThorn Enhanced was up 11.16%.

AlphaThorn trades the gold spot price long and short using an algorithm. The algorithm relies on technical factors for its trading signals. Guaranteed stop losses are used on every position and every trade is consistent in size. The AlphaThorn Secured strategy puts a portion of the initial investment into a guaranteed bank deposit and trades the other portion of the investment. The strategy has an annualized return of 9.53% AlphaThorn Enhanced is a fully invested strategy. AlphaThorn Enhanced produces an annualized return of 54.17%.

AlphaThorn trades a limited number of positions approximately four times per week without directional bias. The goal of the strategies is to track sentiment and ride intraday price movements. The variation between the two strategies gives investors a choice about their risk tolerance.

The global COVID-19 pandemic fuelled safe-haven investment demand for gold in the first quarter according to data from the World Gold Council. Central banks opted to shore up gold reserves in the first quarter, while consumers all but halted jewelry buying and other retail gold activity as a result of lockdowns. Global gold demand in value terms reached US$55bn - the highest since Q2 2013. The price also reached new record highs in Indian rupees and Turkish lira, among others.

An income portfolio pays off

The Variant Alternative Income Fund from Variant Investments was up 0.87% in May and is up 1.76% year to date. The strategy is focused on finding niche income-generating assets that have strong cash flow characteristics and are uncorrelated to the bond market. The strategy is designed to provide a high level of current income.

The strategy invests in assets like litigation finance, specialty finance, niche debt, and other securities to create the income portfolio in an interval closed-end fund. The fund offers quarterly liquidity.

Macroeconomic developments, particularly those associated with the expected impact of the COVID-19 pandemic, had a larger-than-usual impact on Fund performance in the first quarter, Variant said in its latest investor commentary. The fund's allocation to litigation finance was the largest contributor to performance. "In addition, a secondary market acquisition of an LP (Limited Partner) interest in a real estate fund boosted results in the quarter. Despite the interest rate adjustment mentioned above, the Fund's senior credit facilities generally contributed to positive returns due to relatively high interest rates and origination points on new draws," the note said.

Variant also used the quarter to upsize positions in areas that are expected to grow or rebound over the remainder of the year. The fund also made a new commitment to a specialty finance fund with an existing partner, participated in two co-investment opportunities with another existing relationship, and closed on a secondary market acquisition of an LP interest in a real estate fund.

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Last issue of The Corona Fighters Report: Report 40.

Opalesque's Corona Fighters reports are open articles. To see all past reports, type Corona Fighters in our search engine: www.opalesque.com/index.php


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Disclaimer: This is not investment advice. Opalesque has not verified this information and gives no warranty of accuracy or completeness. Past performance is not indicative of future results. See our Terms & Conditions for more information.

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WEBINARS:

Meet 10 fund managers and learn how and why their strategies delivered positive returns and/or protected capital during the Corona led market meltdown! Each webinar lasts an hour and features five managers.

"A well-chosen topic of discussion and a great set of speakers to hear and learn from."
"I enjoyed the webinar and found the introduction to the strategies to be diverse and insightful.
"Very resourceful and insightful."


VIDEO REPLAY of CORONA FIGHTERS - Episode 1 webinar: www.opalesque.com/webinar/#pw4

VIDEO REPLAY of CORONA FIGHTERS - Episode 2 webinar: www.opalesque.com/webinar/#pw5


Video replays of Opalesque's past webinars can be found here: www.opalesque.com/webinar/#pastwebinar


Don't miss our new webinars!


- How quants achieve material improvements in ESG investment performance

Time: Thursday, June 18th, 10 am EST
Details and registration: www.opalesque.com/webinar/ESG/


- Corona Fighters Episode 3

Meet five more asset managers who delivered during the meltdown.

Time: Tuesday, June 23rd, 10 am EST
Details and registration: www.opalesque.com/webinar/



Opalesque's upcoming webinars: www.opalesque.com/webinar/


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