October 2023
WELCOME TO OUR MONTHLY NEWSLETTER.
Designed to serve as your primary source for navigating the world of alternative investments.
The phrase “higher for longer” has gained traction of late, as the world’s central banks have indicated they may need to maintain interest rates at current (or potentially higher) levels to continue combating inflation.
Higher interest rates have an impact on all major asset classes. In equities, it creates fiscal strain and widening dispersion in stock performance. In credit, companies seeking to service or refinance debt face higher borrowing costs and tighter loan standards, leading to heightened volatility. Across commodities and currencies, volatility is also likely to remain elevated as central banks address inflation within their own economies.
While investors are still assessing the implications of a sustained period of higher rates, we believe there is a current opportunity for macro hedge fund strategies, which have historically performed best when interest rates are higher, when volatility is elevated, and often when traditional asset portfolios suffer.
Returns for macro hedge fund managers are primarily driven by large market and price movements in either direction, providing macro investors the opportunity to generate uncorrelated returns, regardless of the direction of risk assets. By capturing those return-generating opportunities, we believe macro hedge funds should continue to drive value in client portfolios.
Chart of the Month
Hedge Funds Performed Better in Higher Rate Environments
Hedge fund strategy performance in different risk-free rate environments
Spotlight: Beyond 60/40: Episode 8
Anastasia Amoroso , iCapital Chief Investment Strategist, discusses absolute return strategies with Joe Dowling , Senior Managing Director and Global Head of Blackstone Alternative Asset Management; and iCapital Co-Founder and Managing Partner Dan Vene highlights how iCapital Marketplace is expanding access to alternatives.
Monthly Market Roundup
Discover how the widening dispersion between winners and losers is creating opportunities for alpha in the new, higher-rate environment.
In this report, Preqin provides data and insights to help navigate the alternatives landscape and answer some important questions about what our industry can expect in the next five years.
In the latest episode of The View from Apollo podcast, Chief Economist Torsten Slok talks with Jim Vanek, Co-Head of Global Performing Credit, about what’s happening in the credit markets and potential opportunities in private credit.
Reduced exits, extended hold times, and steady dry powder reserves point toward an incoming wave of tech asset exits that will create a crowded, competitive buyer’s market.
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In Case You Missed It
In today’s increasingly volatile market environment, the need to incorporate a diverse range of quality private asset exposures into a portfolio is greater than ever. Read more.
Discover why macro hedge funds have historically performed best when interest rates are higher, when volatility is elevated, and often when traditional asset-only portfolios suffer. Read more.
Fixed income investments with principal protection, including rate-linked investments, can help investors generate current income while mitigating downside risk. Read more.
Weekly Market Pulse
In Chief Investment Strategist Anastasia Amoroso 's Market Pulse , read why despite potential near-term headwinds, we still see several reasons to remain constructive in segments of the market throughout the balance of the year.
Podcast: Alpha Exchange
Catch iCapital Chief Investment Strategist Anastasia Amoroso on Alpha Exchange , where she discusses how iCapital is expanding access to private markets with host Dean Curnutt .
New at iCapital
Explore our new suite of insights and education materials dedicated to annuities to learn how they can help investors build a guaranteed income stream and address retirement planning needs.
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This material may contain forward looking statements. Forward looking statements include, but are not limited to assumptions, estimates, projections, opinions, models and hypothetical performance analysis. Forward looking statements involve significant elements of subjective judgments and analyses and changes thereto and/or consideration of different or additional factors could have a material impact on the results indicated. Due to various risks and uncertainties, actual results may vary materially from the results contained herein. The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward looking statements or to any other financial information contained herein.
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Products offered by iCapital are typically private placements that are sold only to qualified clients of iCapital through transactions that are exempt from registration under the Securities Act of 1933 pursuant to Rule 506(b) of Regulation D promulgated thereunder (“Private Placements”). An investment in any product issued pursuant to a Private Placement, such as the funds described, entails a high degree of risk and no assurance can be given that any alternative investment fund’s investment objectives will be achieved or that investors will receive a return of their capital. Further, such investments are not subject to the same levels of regulatory scrutiny as publicly listed investments, and as a result, investors may have access to significantly less information than they can access with respect to publicly listed investments. Prospective investors should also note that investments in the products described involve long lock-ups and do not provide investors with liquidity.
Credit Suisse (CS) Event-Driven Index is a subset of the CS Hedge Fund (HF) Index that measures the aggregate performance of Event-Driven funds, which typically invest in various asset classes and seek to profit from potential mispricing of securities related to a specific corporate or market event. CS Global Macro Index: A subset of the CS HF Index that measures the aggregate performance of global macro funds, which typically focus on identifying extreme price valuations in equity, currency, interest rate and commodity markets. CS HF Index: An asset-weighted hedge fund index that includes funds in the CS HF Database, which tracks ~9,000 funds with a minimum of US$50 million under management, a 12-month track record, and audited financial statements. The index is calculated/rebalanced on a monthly basis and reflects performance net of all performance fees and expenses. CS Long/Short Equity Index: A subset of the CS HF Index that measures the aggregate performance of long/short equity funds, which typically invest in both long and short sides of equity markets, focusing on diversifying/hedging across particular sectors, regions, or market capitalizations. CS Multi Strategy Index: A subset of the CS HF Index that measures the aggregate performance of multi-strategy funds, which typically allocate capital based on perceived opportunities among several hedge fund strategies.
Alternative investment products and services may be offered through iCapital Securities, LLC. Structured investment products and services may be offered through Axio Financial LLC and/or SIMON Markets LLC. iCapital Securities LLC, Axio Financial LLC, and SIMON Markets LLC are each a registered broker/dealer, member FINRA and SIPC, and an affiliate of Institutional Capital Network, Inc. (“iCapital”). Annuities and insurance services provided by SIMON Annuities and Insurance Services LLC, an affiliate of iCapital. iCapital Advisors, LLC, a subsidiary of iCapital, is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Outcome Driven Strategies, LLC and Cornerstone Advisory, each an investment adviser registered with the SEC, provide investment advisory services for the structured investment separately managed accounts described herein. Outcome Driven Strategies, LLC is jointly owned by Axio Advisors LLC and Cornerstone Advisory (not affiliated with iCapital). Alaia Capital LLC, an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”), acts as a portfolio consultant to m+ funds and is an affiliate of iCapital. These registrations and memberships in no way imply that the SEC, FINRA or SIPC have endorsed the entities, products or services discussed herein. iCapital and iCapital Network are registered trademarks of Institutional Capital Network, Inc. Additional information is available upon request.
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