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Alternative Markets Update - Macro And Political Outlook June 2019

13/6/2019

Alternative Markets Update June 2019

June started in a more dynamic fashion for hedges funds are already recouped May’s losses. The anticipation of an interest rate cut this year as a result of Fed’s announcements resulted to a strong bounce back for equity markets. Equity hedge strategies profited the most during the first weeks of June, a month that so far is characterised by the trade war discussions and further tariff plans from US. Macro and CTA strategies had their bets right so far this month and they are waiting to capitalise on future volatility events. Bitcoin’s momentum slowed down in June and its price has receded from $8,740 to $7,900, reaching a market cap of $140bn. Ethereum had also a

slightly negative month so far and is keep following the same pattern as bitcoin.

Macro and Political Outlook June 2019 MacroEagle

Source: MacroEagle

Alternative Markets Update II Q1 2019

29/4/2019

Alternative Markets Update Q1 2019

Hedge Funds

Bad performance, pressure for lower fees and redemption constituted the environment that hedge funds faced as they were entering 2019. Despite the negativity in the industry, hedge funds proved themselves resilient and posted their best quarterly performance in a decade. Rally in equity markets was the main driver of the strong performance, but their reluctance to take full long positions in equities led to relative underperformance. Equity strategies are the biggest winners across the different strategies according to data from Preqin with CTAs starting to perform in March after a very disappointing start.

Although investors continued redeeming from the asset class, the assets under management in the industry rose mainly from capital gains and according to HFR, they reached to almost $3.2 trillion globally. Investors are trying to diversify their hedge fund portfolio exposure by region, sector and strategy.

Figure 1. Hedge Fund Strategies Performance 1Q2019, Source: Preqin

Our in-house strategies followed a same pattern during the first quarter of the year, with three out of our top five managers being US Equity focused funds. The manager that invests in high conviction ideas of carefully selected hedge fund managers is enjoying a very strong quarter followed by a US equity strategy focussed on TMT, helthcare and consumer sectors with specific interest in innovation and disruptive technologies. The recent rally in cryptocurrencies led our active altcoin manager to strong performance during February and March, bringing the strategy in our top five table for the first time since 2017. Our activist strategy suffered in March, despite a really strong performance on its underlying portfolio during January and February. Finally, our discretionary global macro strategy had one of its best months ever since inception posting an astonishing +15.27%, mainly from running long duration positions in the US, Australia and New Zealand and mixed duration positioning in Europe, complemented by bond auction trading gains.

Table 1. In-House Strategies Performance 1Q2019, Source: Stone Mountain Capital Research

Alternative Markets Update Q1 2019 - Macro and Political Outlook April 2019

16/4/2019

Alternative Markets Update Q1 2019

After a rather disappointing last year, hedge funds bounced back and are enjoying their strongest quarter since 2006 according to data from HFR, with macro and CTA strategies leading the race so far with gains driven from their fixed income exposure. Private equity is also enjoying a good first quarter with growth equity strategies raising almost $25bn and the number of deals has also increased compared to the last months of last year. Private debt fundraising on the other hand has slowed down, with larger firms claiming the largest part of the pie and creating a rather concentrated industry with high level of dry powder and uncertainty due

to geopolitical reasons. Bitcoin and Ethereum enjoyed a strong rally during the first quarter of 2019, surpassing $5,000 and $160 respectively.

Macro and Political Outlook April 2019 MacroEagle

Source: MacroEagle

Alternatives Market Review 2018 and Outlook 2019

30/1/2019

Alternative Markets Review 2018

2018 started as strongly as it finished in 2017, but spikes in volatility caught hedge funds unprepared and highlighted the weaknesses of the industry. The rest of the year continued in the same pattern with major political risks adding to the problem such as Brexit outcome, European elections, end of quantitative easing and trade war. The fourth quarter and equities sell-off since October ruined hedge funds hopes to rebound and sank them deeper into their losses. Event-driven and equity hedge strategies were the worst performers among hedge funds, followed by systematic CTA and macro strategies. For our in-house strategies, the scenery was slightly altered as the worst performing asset class was tactical trading. Underperformance of cryptocurrency and CTAs are the main drivers of the underperformance compared to other indices, despite the strong performance of our global macro and market neutral strategies. Equities globally suffered severe losses, similar to the majority of our in-house strategies. Our niche equity strategies focusing on disruptive techno-

logies and directors' dealing though posted strong returns and constitute our best two performing strategies for 2018, consequently leading to a relative outperformance of peer indices. Direct lending and structured credit enjoyed a good year assisting in our credit index's outperformance. Only two out of eight strategies posted losses for a year, when equity and credit largely disappointed their investors. Overall, our cross-asset and single manager index posted losses for the year due to our tactical trading underperformance, but still performed better than the majority of the individual indices.

European Direct Lending III: Opportunities In The Lower Middle Market

6/11/2018

Oliver Fochler
Managing Partner, CEO
Tel.: +44 7922 436360

Alexandros Kyparissis
Analyst Hedge Funds
Tel.: +44 7843 144007

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STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL.94

Lending has always been the core banking business over centuries until the great financial crisis hit in 2008, which gave birth to a new asset class: private debt. For years, private markets were dominated by funds focusing on equity and banks on debt. The regulations that came into force in the aftermath of 2008 financial crisis created a funding gap for a specific market segment. Large corporates can finance themselves via debt and equity public issuance or bank lending, but funding middle market and SME corporates remains a challenge. The rise of debt funds together with fintech firms’ efforts to revolutionise alternative credit are shaping the current private debt environment, which is still enjoying a strong fundraising momentum. The 2023 forecast shows an increase for private debt AuM to $1.4 trillion, while assets have doubled since 2008.

Figure 1. Private Debt AuM, Forecast 2023, Source: Preqin

Figure 2. Private Debt AuM, 2013-3Q18, Source: Preqin

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Alternative Markets Update - Macro And Political Outlook June 2019

Alternative Markets Update II Q1 2019

Alternative Markets Update Q1 2019 - Macro and Political Outlook April 2019

Alternatives Market Review 2018 and Outlook 2019

European Direct Lending III: Opportunities In The Lower Middle Market

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