Investors should beware of the ‘super bears’ forecasting a 1930s-type global depression and position themselves for economic recovery in recession-beating alternative investment strateg
Investors should beware of the ‘super bears’ forecasting a 1930s-type global depression and position themselves for economic recovery in recession-beating alternative investment strategies, according to Tony Robinson, the chief strategist for Netherlands-based fund of funds manager Finles Capital Management.
Robinson was speaking at the Finles Alternative Investment seminar in Utrecht.
‘My assessment for 2009 is that we’ll see a muddling through, with markets moving up, down, and sideways, but ultimately having a bias to the upside as the green shoots of recovery appear first in the US,’ he said.
Robinson said that a ‘Great Depression’ outcome with a one to two-year relentless decline in equities markets is unlikely as total money supply in the US is currently growing at nine per cent a year, compared with a contraction in the 1930s, and many stock markets around the world have reached valuation levels typically seen at the end of major bear markets.
He added that investors should start to increase their exposure to high yield and distressed strategies, with an emphasis on cash-flow generation. They should also focus on quality senior secured loan assets and managed futures and liquid global macro strategies.
One of the alternative investment strategies presented at the Finles seminar was by Bob Press, managing partner and chief investment officer of Trafalgar Capital Advisors.
Trafalgar Capital manages the Luxembourg-registered Specialized Investment Fund, which provides corporate finance advisory and short-term financing facilities for publicly listed small and medium-sized enterprises.
The Luxembourg-registered fund produced an investment return of 19.17 per cent in 2008, compared with a negative return of -19.07 per cent for the benchmark Credit Suisse Tremont Hedge Fund Index.
Press said: ‘We have seen a sharp increase in demand for our services as companies’ traditional financing options with banks have dried up in the credit crunch. This in turn is providing us with a growing number of interesting investment opportunities for the fund.’
Another strategy was presented by Marcel Melis, chief executive of Energy Capital Management. The Amsterdam-based investment manager runs the MMT Energy Fund trading in power and its component commodities in the inefficient European energy market matrix.
All of MMT’s trades are in liquid cleared futures contracts. The fund produced an investment return of 24.39 per cent in 2008 and is already up around 5.0 per cent in January. The fund has no correlation with equity and bond markets and so is a good generator of ‘pure alpha’ returns offering investors portfolio protection for downside risk.
Melis said: ‘We understand and trade the entire energy matrix, whereas most market participants are not set-up optimally and have separate trading desks for each market. This means we can take advantage of the differences between these still young and inefficient markets and that we avoided the traps of highly volatile commodities prices last year that many funds fell into.’
