e-fundresearch.com: Let us take a look back to the year 2016: From Brexit to Donald Trump - what are your personal lessons learned from last year’s market developments?
Florian Gröschl: In 2016 there were many things to learn, as every year. One dogma that we probably have to put aside is that markets are always right. Knowing that this saying in its core sense applies to a slightly different set of developments we have to acknowledge that financial markets obviously have a very poor ability to call popular voting results. So my key take away from 2016 is: there is nothing that cannot happen and there is no reaction to whatever unexpected outcome of an event that might not take place!
e-fundresearch.com: How did your strategy manage to perform during last year's environment and which particular investment themes have delivered the strongest performance contribution?
Florian Gröschl: There are two main targets of our strategy: 1. Capital preservation, which we did achieve and 2. 300bps return over money markets. We finished the year with +0,07% return net of all fees, which means that we definitely hit target one and parts of target two, given that the 3m Euribor is still around -0,32%. So with a volatility less than 1,5% and the promise never to lose more than 5% per calendar year, it really could have been worse. Are we perfectly satisfied? – No, because we did not make money for our investors.
The whole liquid alternative sector did not have his best year in 2016, which obviously was also a drawback for us. Fortunately a couple of our managers like Trycon, Laffitte and Zest plus some profitable directional positions on gold and miners and the trading activities helped us a lot.
e-fundresearch.com: With regards to the new year 2017: How optimistic is your view into the future and to what extent will your strategy be able to benefit from this market environment?
Florian Gröschl: Grown up in fixed income optimism is nothing very familiar to me. This year in particular might have many challenging surprises for us. Trump will have to deliver, Article 50 will be activated, Germany and France will elect new leaders, so many things not to be fearful about but certainly alerted….
For my strategy in particular the expectations are quite positive. First of all alternatives did not perform very well over the last couple of years, so there might be some mean reversion and secondly there are not many managers and/or funds out there who have no strategic longs or benchmark constraints what so ever.
My advice for 2017: Stay open minded, flexible and never underestimate your portfolio risks!