ALTIN, the Swiss alternative investment company listed on the London and Swiss stock exchanges, posted a six per cent increase in net asset value (NAV) during the first quarter.
The share price discount to NAV fell significantly since the beginning of 2013, reducing from 34.5 per cent to 20.1 per cent.
The portfolio remains sufficiently liquid, with 67.9 per cent of assets invested in funds with monthly or better liquidity, allowing the manager to make allocation shifts when deemed necessary.
The first quarter of the year was a period of contrasting forces and of irregular market dynamics.
In the US and Europe, the economic situation kept on improving (assuming that the cold weather was responsible for the US slowdown), which led central banks in their respective countries to maintain their relatively optimistic stances.
At the same time a succession of fears on the emerging market front, both with regards to the economy and to geo-political issues (namely the Ukrainian crisis), led to bouts of volatility.
As far as Japan is concerned, enthusiasm for Abenomics seemed to fade as the date set to increase VAT approached and as household and business confidence suddenly dropped. In that context, equity markets tended to move sideways throughout the quarter, with the US and Europe ending the period slightly up, whereas Emerging Markets and more significantly Japan ended the period down.
On the fixed income side, rates and credit spreads tended to go down albeit with some volatility across the quality spectrum.
There was quite a bit of dispersion across the commodity sector with gold and agricultural products up, energy flat and industrial metals down.
Towards the end of March equity markets went through a strong rotation that pushed down companies that had had a strong relative performance, such as some bio-tech stocks, and pushed up those that had been weaker, such as some utilities. It is unclear at this stage if this is only noise, or if it is the beginning of a paradigm shift amongst investor preferences.
In this environment hedge funds on average posted positive returns, with most strategies up for the quarter, but with a high level of dispersion amongst managers. Relative value strategies led the way and managed to be relatively immune to the jigsaw moves of the market. Risk-seeking strategies were also able to perform positively over the quarter. This was particularly true for managers in the event driven space and with low equity exposure, as they were not impacted as much as some equity long/short managers by the rotation.
On the negative side, macro managers suffered from the reversal of some popular themes as well as the absence of lasting trends. Noticeably however, commodity traders managed to post relatively strong performances after several years of disappointing returns. In the specific case of ALTIN’s portfolio this silo was among the top contributors to overall performance despite a relatively low allocation. Protection strategies and equity market neutral strategies also contributed strongly when compared to their respective weights in the portfolio.
