Tag Archives: alt-investing

Equinox Launches Systematic Global Macro Fund

By DailyAlts Staff The investment world has become a tumultuous place. In China, stocks lost nearly 30% of their value in less than a month, and despite the heavy-handed interventions of the Communist government, the country’s stock markets appear to be on the ropes again. Oil prices also slid close to 30% in July, while the yield on the 10-year Treasury bond has bounced between 2.2% and 2.5%, often with major moves happening in a single day. Add in the ongoing Greek debt crisis, which is far from being resolved, and it’s understandable why stocks and bonds have been increasingly volatile investments in 2015 – and why investors are looking to alternative strategies to hedge against downside risk. Global macro strategies, which seek to capitalize on the inefficiencies in long-term macroeconomic cycles, can be particularly attractive in this environment. These strategies aim to generate returns by taking long and short positions, typically using futures contracts, in global markets across asset classes: equity indexes, government bonds, currencies, and commodities. “Systematic macro” is a particular kind of global macro strategy, involving rules-based factor exposures, trend-following and counter-trend trading, rather than relying on the discretion of a portfolio manager, and investors seeking exposure to systematic macro strategies have one new option as of July 6: the Equinox IPM Systematic Macro Fund (MUTF: EQIPX ). The Equinox IPM Systematic Macro Fund pursues its investment objective of long-term capital appreciation by employing two sub-strategies: The first involves investing directly in an actively managed fixed-income portfolio consisting of cash, cash equivalents, money market funds, and U.S. Treasury debt with one year or less to maturity; while the second involves investing directly or indirectly through a subsidiary in futures contracts and other related securities. The indirect investments are managed by IPM Informed Portfolio Management AB in accordance with its Systematic Macro Trading Program, also known as the IPM Program. The IPM Program attempts to build a diversified portfolio of futures contracts consisting of a large number of uncorrelated investment ideas based on four broad fundamental themes: Value themes designed to take advantage of discrepancies between market value and longer-term “intrinsic” value; Risk premia themes designed to exploit the time-varying nature of investment opportunities and returns; Macroeconomic themes based on economic, political, and/or financial trends; and Market dynamic themes focused on investment flows, interest rate volatility, and other attributes. If the fund sounds good, be prepared to make a large investment: Shares are available in I-class only with a 1.89% net-expense ratio and a minimum initial investment of $200 million. For more information, read the fund’s prospectus . Share this article with a colleague

Timing Is Everything

The length of time investors have to plan for is the single most powerful factor in their investment process. If time is short, investments with the highest potential return are the least desirable, because they entail the greatest risk. But given enough time, assets that appear risky become desirable. Time transforms investments from least attractive to most attractive – and vice versa. Our time horizon has a major impact on our investment strategy. This is true in the natural world as well. I’ve been to the coastal redwoods in California, and they’re awesome. John Steinbeck called them “ambassadors from another time.” In many ways, they are. They regularly reach ages of 600 years or more, and some are over 2000 years old. Their natural resistance to disease and insects allows them to grow slowly and gradually. But they have to. The high rainfall in their coastal habitat leaves the soil with few nutrients. By contrast, stumbling into a thicket of pin cherries in the Northeast woods can leave you breathless, but in a different way. The undergrowth can be so thick it’s easy to get disoriented. Pin cherry trees sprout and grow quickly, taking advantage of any disturbance in the forest canopy. But they only live 20 to 40 years, and they’re an important source of food for many types of animals. It would be foolish to say that either tree is more successful. Each has adapted to its environment. What works in one context doesn’t work in another. That’s why, for investors, the typical time period we use to calculate returns – one year – may be misleading. A single year simply doesn’t match the time available to different investors with their differing objectives and constraints. Different assets – and asset mixes – are appropriate in different circumstances. (click to enlarge) Average return and dispersion of return for various asset classes over different time periods, 1926-2010. Source: Jay Sanders, CPA So if you’re worried about the market, be sure to ask yourself how much time you have until you need the money. Because the quickest way to turn a temporary fluctuation into a permanent loss is to sell the asset. Share this article with a colleague