I just received the latest commentary from our multi-strategy fund partner in Singapore. He runs one of the most consistent funds in our universe of alternatives, managing to stay calm through market swings much like those plants that seem to thrive no matter how many times you forget to water them.
Here is a section:
Our multi-strategy fund ended up slightly in September. With US the election around the corner, it is no surprise that most investors are a bit jittery. Will risk assets surge or stumble? Will rates stay low, or will inflation crank them up? What about the US dollar? What about gold? After the election, all these questions will be put to the test.
Markets are likely to stay volatile, no matter who takes the next turn in the White House. Volatile markets are exactly what our fund strategy is built for. The only thing that worries us is if the markets go quiet.
Market volatility often stems from emotional reactions, leading to mispricing and market inefficiencies. Our long-term track record shows we excel in market chaos. We do not mind whether the markets go up or down, as long as they go somewhere.
Our model is designed to handle volatility or uncertainty by studying different scenarios and anticipating a wide range of outcomes. By preparing for different scenarios in advance and managing on-going changes, we can swiftly and effectively respond to market shifts, leveraging inefficiencies which are often influenced by how investors respond to these events.
At the onset of the Covid-19 pandemic, global markets plunged as lockdowns, uncertainty, and economic contraction took hold. The S&P 500 dropped over 30% in just a few weeks and during the same period, our fund was up over +6%.
US stocks endured significant declines throughout 2022, primarily driven by rising inflation, aggressive interest rate hikes from the Federal Reserve, and fears of an economic slowdown or recession. The S&P 500 entered a bear market, falling more than 20% from its peak, with technology stocks particularly hard-hit as the Nasdaq dropped over 30%. Our fund was up +12.94% in 2022.