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Alternative Market Briefing

The Corona Fighters Report 49: Asset managers who delivered in the downturn

Friday, June 19, 2020

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B. G., Opalesque Geneva:


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.


Digital currency market as the new frontier

The Portal Digital Fund is up +21.6% YTD after returning +8% in April and +3.7% in May 2020. It was launched in January 2019 and returned 61% that year.

The fund is an institutional-grade, actively managed, global multi-manager fund focused on the digital currency investment space and is uncorrelated to global equity, currency, and debt markets. The fund seeks to achieve medium to long-term growth through investing in a diversified portfolio of 5-10 specialist fund managers running digital currency trading strategies. The fund is focused on absolute returns and expects to generate substantial outperformance with lower volatility versus the CCI 30 Index, the benchmark for digital currencies.

"Our core thesis is predicated on our firm belief that 'everything is about to change' as digital assets become the fourth superclass of assets," says a manager commentary reviewed by Opalesque. "As the digital currency market formalises and becomes regulated, it continues to represent a new frontier for accredited investors to seek superior risk-adjusted returns that are uncorrelated with traditional equity and debt markets. These markets are inefficient and represent substantial sources of alpha for skilled investment managers."

The manager and platform is First Degree Global Asset Management, established in 2011 and located in Singapore.

Senior fund manager Mark O. Witten recently discussed future macroeconomic shocks yet to be realised in a video. He concludes: "We continue to believe that digital currencies are one of the only assets that can protect investors from the risk of the potential collapse of our current financial system. Digital currencies have evolved from being a means of transacting to a store of value and a trusted, verified, secure financial and accounting system of digital value that can never be created outside of the cryptographic algorithm.

"It is our firm belief that digital currencies are nothing short of the future of our entire medium of exchange system, and of money itself and the platform on which it operates."


Innovation as the driver

The Man GLG Innovation Equity Alternative fund (DN USD) is up +7.75% YTD after returning 2.4% in April and +3.7% in May 2020. The UCITS was launched in January 2017 and has annualised 5.8% since.

The strategy is a global long/short approach which aims to generate absolute returns by seeking opportunities in companies or sectors undergoing change or innovation. The team searches for companies within sectors that are particularly susceptible to the forces of change and innovation, most notably in technology, consumer discretionary, telecoms and industrials. Companies exhibiting these criteria are often mispriced as consensus sell-side estimates and expectations typically lag the effect of change or innovation. Additionally, these sectors have lower intra-sector correlations and the securities are more driven by micro fundamentals than macro, which lends itself well to building a diverse, risk optimised portfolio.

The investment managers are Mike Corcell at Alex Robarts at GLG Partners LP. The management company is Man Asset Management (Ireland) Ltd.


Good returns despite Hong Kong

The Pictet Mandarin fund (I USD) is up 8.83% YTD after returning +1.53% in May 2020. Launched in October 2010, the $650m Luxembourg-domiciled UCITS has annualised 6% since.

It is managed by Lan Wang-Simond at Pictet Asset Management S.A., a Swiss-headquartered independent management firm with $183bn in total AuM.

The Fund follows an equity long/short investment strategy and mainly invests in equities of companies that are domiciled, or do most of their business, in Asia and, especially, in Hong Kong, Mainland China, or Taiwan. It can invest across any sector and currency. Money market instruments and deposits may represent a significant component of the assets; however, much of its actual performance is likely to derive from exposures created through derivatives and structured products. The investment manager uses fundamental company analysis to select securities that offer favourable growth prospects at a reasonable price (long position) while selling securities of companies that seem to be overvalued (short position).

"The Greater China markets were down against strong performances in developed equities, led by the US," says a manager commentary reviewed by Opalesque. "Europe also staged a strong rally amid optimism on back-to-normal activities. Hong Kong was the worst performer, weighed down by the National Security Law ratified during the NPC in Beijing and potential retaliation measures from the US… Chinese ADR listings also underperformed the main US stocks amid the uncertainties on the Accounting Equitable Act. Geopolitical and legal uncertainties clouded an otherwise better economic reading after the pandemic."

Since the start of June, the managers reduced their exposure to over-owned momentum growth sectors, staying alert of pain trade damages, and added quality cyclicals. They also exited their Hong Kong index hedge as they believe that the macro and geopolitical tail risk is undergoing some near-term relief.


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Last issue of The Corona Fighters Report: Report 48.

Opalesque's Corona Fighters reports are open articles. To see all past reports, please type Corona Fighters in the Opalesque 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!


- 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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