alternative markets update april 2021

​Hedge funds have had their best Q1 performance in more than two decades, despite the recently negative coverage caused by the Archegos collapse and the Gamestop short squeeze. Nevertheless, these negative events have not affected the performance numbers of hedge funds to a large degree. In particular, since hedge funds delivered a good performance in 2020, while mitigating the drawdown when Covid-19 emerged. As a result, hedge funds have seen increased inflows. Figure 1 shows the returns of hedge funds over the last year. Hedge funds lost less in Q1 2020, then they did not manage to keep up with the growth of the S&P 500 during Q2 and Q3 2020. However, since then, hedge funds performed equally or better compared to the S&P 500. Our equity strategy benchmark is down slightly in March 2021, largely driven by strategies focusing on tech and healthcare, which had a stellar 2020. Other strategies that struggled in 2020 are now the key drivers of the returns. The best equity strategy is up almost 17% in 2021.

*|MC_PREVIEW_TEXT|*

RESEARCH PERSPECTIVE VOL. 154 April 2021 Alternative Markets Update April 2021 Hedge funds have had their best Q1 performance in more than two decades, despite the recently negative coverage caused by the Archegos collapse and the Gamestop short squeeze. Nevertheless, these negative events have not affected the performance numbers of hedge funds to a large degree. In particular, since hedge funds delivered a good performance in 2020, while mitigating the drawdown when Covid-19 emerged. As a result, hedge funds have seen increased inflows. Figure 1 shows the returns of hedge funds over the last year. Hedge funds lost less in Q1 2020, then they did not manage to keep up with the growth of the S&P 500 during Q2 and Q3 2020. However, since then, hedge funds performed equally or better compared to the S&P 500. Our equity strategy benchmark is down slightly in March 2021, largely driven by strategies focusing on tech and healthcare, which had a stellar 2020. Other strategies that struggled in 2020 are now the key drivers of the returns. The best equity strategy is up almost 17% in 2021. Figure 1: Hedge Fund Performance vs. S&P 500, Source: Preqin Pro, April 2021 The big topic in 2021 so far are cryptocurrencies, which continued their steep upward trend from last year. Consequentially, many crypto hedge funds have been launched during the last year. The average crypto hedge fund is up 124% in Q1 2021, easily outperforming every other strategy. Our tactical trading strategy index, which largely consists of crypto related strategies, is up 162% in Q1 2021. The best crypto strategy, Digital Asset Discretionary/ Systematic Long Short, is up already 311% in 2021, while the worst crypto strategy is up 101%. Another tactical trading strategy, Discretionary Global Macro, also does very well and is up already 32%. For cryptocurrencies, a major event took place on 14th April 2021, when Coinbase (COIN) went public. It did so with a direct listing on Nasdaq with a reference price of $250 per share. The market opened at a price of $381 and surge to almost $430 per share. At the end of the day, COIN closed at 328$ per share, valuing the company at $85.5bn. Ahead of COIN’s direct listing, cryptocurrencies surged to all-time highs. Bitcoin (BTC) reached a price of $63.5k, while Ethereum (ETH) surged to almost $2.5k. Soon after, cryptocurrencies took a hit. BTC and ETH lost relatively little with slightly more than minus 10%, while other altcoins lost up to 30% over the subsequent days. Since this decline, cryptocurrencies are gradually recovering. As of the time of writing, BTC is trading at $56k, while ETH is almost back at its all-time high with $2,423. BTC’s market cap is slightly above $1tn, while ETH’s market cap is at $280bn. Figure 2 and 3 show the stellar price development of BTC and ETH in 2021 so far. The total market cap of cryptocurrencies remains just slightly above $2tn. Another important development was the approval of the first ETH ETF by the Canadian authorities. Additionally, it seems that China has changed its course on cryptocurrencies, as it calls BTC now an investment alternative. Figure 2: Price Development of Bitcoin in 2021, Source: CoinMarketCap, April 2021 Figure 3: Price Development of Ethereum in 2021, Source: CoinMarketCap, April 2021 Oil prices have risen continuously since Covid-19 hit in March 2020. Since early March 2021, when WTI crude hit its highest mark since Covid-19 with $65 per barrel, prices declined. Just recently, WTI crude hit the $60 per barrel mark again, which is shown in Figure 4. This is a response following the demand forecast of the OPEC+. Additionally, the amassed oil reserves during Covid-19 are almost used up. Therefore, it is very likely that oil production will increase again over the coming months. Politically, the EU has laid out a plan to fund its recovery measures from Covid-19 with a $1tn debt plan over the next five years. Figure 4: 1Y WTI Crude Oil Prices, Source: FRED & U.S. Energy Information Administration, April 2021 STONE MOUNTAIN CAPITAL Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Dubai and Umm Al Quwain in United Arab Emirates. We are advising 30+ best in class single hedge fund and multi-strategy managers across equity, credit, and tactical trading (global macro, CTAs and volatility). In private assets, we advise 10+ sponsors and general partners across private equity, venture capital, private credit, real estate, capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. As of 16th February 2021, Stone Mountain Capital has total alternative Assets under Advisory (AuA) of US$ 60.3 billion. US$ 47.6 billion is mandated in hedge funds and US$ 12.7 billion in private assets and corporate finance (private equity, venture capital, private debt, real estate, fintech). Stone Mountain Capital has arranged new capital commitments of US$ 1.65 billion across hedge fund, private asset and corporate finance mandates and has been awarded over 50 industry awards for research, structuring and placement of alternative investments. As a socially responsible group, Stone Mountain Capital is a signatory to the UN Principles for Responsible Investing (PRI). Stone Mountain Capital applies Socially Responsible Investment (SRI) filters to all off its alternative investment strategies and general partners on behalf of investors.    Our Team   Our Mandates   Our Research   Our News     Contact We are able to source any specific alternative investment search and maintain relationships with dozens of best-in-class hedge fund managers, private equity and private debt general partners (GPs) and real estate and infrastructure developers. We don’t pass any costs on to our investors, since our compensation comes from our mandated managers, GPs and developers. Please contact us, should you require further information about our solutions.   Schedule a call with the team Main UK Tel.: +44 207 268 4905 Main Switzerland Tel.: +41 44 586 45 55 Main UAE Tel.: +971 4383 5386 We have updated our privacy policy to take into account the new requirements of the GDPR. Please take some time to read the policy, which explains what personal data we collect, why we collect it, how we use it and other relevant information. You can review our privacy policy here, our anti-bribery policy here and our commitment to the UK stewardship code here. Stone Mountain Capital LTD is registered (Reference: ZA589246) in the data protection public register of the Information Commissioner's Office ('ICO') in the United Kingdom. No action is required if you wish to remain in contact, however please reply if you want your details removed by contacting us at [email protected] or by using the unsubscribe button below. In case this newsletter has been forwarded to you and you want to subscribe, please click here. Stone Mountain Capital is a limited company (LTD) registered in England & Wales with registered number 8763463. The registered address is: One Mayfair Place, Devonshire House, Mayfair, London W1J 8AJ, England, United Kingdom. Stone Mountain Capital LTD is authorised and regulated with FRN: 929802 by the the Financial Conduct Authority (‘FCA’) in the United Kingdom. Stone Mountain Capital LTD is the Distributor of foreign collective investment schemes distributed to qualified investors in Switzerland. Certain of those foreign collective investment schemes are represented by First Independent Fund Services LTD, which is authorised and regulated by the Swiss Financial Market Supervisory Authority (‘FINMA') as Swiss Representative of foreign collective investment schemes pursuant to Art 13 para 2 let. h in the Federal Act on Collective Investment Schemes (CISA). Stone Mountain Capital LTD conducts securities related activities in the U.S. pursuant to a Securities and Exchange Commission ('SEC') Rule 15a-6 Agreement with Crito Capital LLC, a U.S. SEC registered broker-dealer, and member of Financial Industry Regulatory Authority (‘FINRA’), Securities Investor Protection Corporation (‘SIPC’) and Municipal Securities Rulemaking Board (‘MSRB'). Stone Mountain Capital Partners LLP is incorporated as limited liability partnership in England & Wales with company registration number: OC430515. Its registered office is: One Mayfair Place, Devonshire House, Mayfair, London W1J 8AJ, United Kingdom.  Stone Mountain Capital Partners LLP is registered as Appointed Representative with FRN: 934964 of Stone Mountain Capital LTD which is authorised and regulated with FRN: 929802 by the Financial Conduct Authority (‘FCA’) in the United Kingdom. Stone Mountain Capital FZC is registered at: Business Center, Al Shmookh Building, Umm Al Quwain Free Zone, Umm Al Quwain, United Arab Emirates. All information in this perspective including research is classified as minor acceptable non-monetary benefits ('MNMB') in accordance with article 11(5)(a) of the MiFID Delegated Directive (EU) 2017/593 and FCA COBS 2.3A.19. Copyright © 2021 Stone Mountain Capital LTD. All rights reserved. Any business communication, sent by or on behalf of Stone Mountain Capital LTD or one of its affiliated firms or other entities (together "Stone Mountain"), is confidential and may be privileged or otherwise protected. This e-mail message is for information purposes only, it is not a recommendation, advice, offer or solicitation to buy or sell a product or service nor an official confirmation of any transaction. It is directed at persons who are professionals and is not intended for retail customer use. This e-mail message and any attachments are for the sole use of the intended recipient(s). Our LTD accepts no liability for the content of this email, or for the consequences of any actions taken on the basis of the information provided, unless that information is subsequently confirmed in writing. Any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the limited company. Any unauthorised review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please notify the sender by reply e-mail and destroy all copies of the original message and any attachments. By replying to this e-mail, you consent to Stone Mountain monitoring the content of any e-mails you send to or receive from Stone Mountain. Stone Mountain is not liable for any opinions expressed by the sender where this is a non-business e-mail. Emails are not secure and cannot be guaranteed to be error free. Anyone who communicates with us by email is taken to accept these risks. This message is subject to our terms at our Disclaimer.