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Because of the fact I was actively engaged with investment advisory, funds research, due diligence and selection few years ago, Citywire asked me to share my insights or even pick some funds where its best to invest in post-covid environment.
I’m happy to share with those insights here as well. Please note: it’s neither recommendation nor solicitation to buy or sell mentioned funds, you should make your own research and selection. It’s what suits me as an investor only and not necessarily may fit any other investor needs. Seek for professional advise before making any investment decision.
Covid-19 continues to cause uncertainty across global markets. Despite the equity market rebound uncertainty levels remain high which is problematic for investors who rely on their capital producing a steady flow of income. In this context, we are seeking to diversify into truly uncorrelated alternatives which are not linked to the economic cycle or are capable exploit it for the best.
This is a good time to remind ourselves of asset classes whose fundamentals remain unchanged even in times of major financial distress. Those certainly include Life Settlements as a unique example of an investment that offers guaranteed pay-outs from A rated Life Insurance Companies, if kept to maturity, with a defined and known cost structure. Important to note that credit risk remains limited as rating agencies maintain stable sector outlook for North America life insurers and believe that most are well positioned to handle the immediate impact of COVID-19, given that they have built up good capital buffers and liquidity. Thus the predictable cash flow of Life Investments offers a fixed income alternative investment opportunity with superior alpha. The low volatility of the portfolio means the asset class also offers a highly attractive, asymmetric risk profile, especially for investors prioritizing capital preservation. To explore the benefits of the assets class we've been investing into a $2bn Long Term Growth Fund managed by Carlisle Management Company since 2012 reaping double digits per year since the start more than 10 years ago with extremely low vol. The current pandemic just proved our selection.
To add some spices we recently have allocated a portion of our portfolio to Haidar Jupiter Fund, an opportunistic, global-macro fund which utilizes both directional and arbitrage based strategies. Bond market trading accounts for the big part of fund's portfolio. Haidar foresaw global capital market shocks because of COVID-19 before it blossomed out and that paid off bigtime: while many investors were freaking out as the markets collapsed in March, Haidar posted a 25.26 percent gain in its flagship Haidar Jupiter fund that month. After tacking on further gains during next months, Haidar Jupiter is now up a blistering 67-plus percent for the year. Such gains may not be too surprising to those who have followed the fund since its 1999 launch. We have been following it for the 6 years already. The fund has posted double-digit returns in three of the past four years — a period when most of the largest macro funds were mostly posting small single-digit gains or losses - and double-digit gains in ten of the most recent 14 years.
Last not least. The unprecedented printing of money by central banks to fight the economic consequences of COVID-19 makes us worry for the long term inflation and depreciation of value. Assets such as gold which have not been impaired by the pandemic are rising to a multi-year highs. So we started to look more closely to the asset classes which have both fixed-supply and improved usage/fundamentals – like cryptocurrency. Cryptocurrency has out-performed most/all other asset classes this year. Decentralized finance (DeFi) subsector of the blockchain industry has emerged as one of the dominant use cases beyond store-of-value and speculation (on future use cases). What’s really exciting is the amount of value that’s been flooding into DeFi protocols over these past few months. Over $3.5 billion in value is locked in DeFi protocols at the moment. People are beginning to experiment with non-centralized finance, particularly with borrowing and lending crypto-assets to generate yield. This might be an inflection point for open finance. For time being we still can't provide with the exact names / funds where our share of wallet was parked - our research, due diligence, discussions with several fund managers still continues.