The third quarter of 2019 proved to be difficult for the Crow Point Liquid Alternative Fund lineup as the strategies underperformed their respective return targets. The primary reason for the underperformance was a failure to participate in the decline of long-term interest rates, which drove bond returns and other “risk off” oriented investments higher; areas of the marketplace generally underrepresented in Crow Point strategies. A bias towards smaller capitalization equities also negatively impacted strategy returns over this past quarter as well as the past twelve months.
Going forward, Crow Point Partner’s fundamental outlook is definitively mixed as both the effects and the future uncertainty of the trade dispute with China remain the key issue impacting global investment markets. Monetary policy and broader credit conditions are now a tailwind as the Fed and the ECB are both again in easing mode.
We believe resolution of the trade dispute between China and the United States is critical to a more constructive investing environment where risk assets perform better, and bonds and other bond proxies underperform. In such an environment, we believe a strong rotation could occur where interest rates rise, the dollar declines, and the recently underachieving asset classes and investments would be viewed more favorably. Value stocks, small cap, international equities, financials and many others have generally been left behind over the past year and in our view represent a large opportunity for outperformance on a forward basis.
As investors, we remain highly cognizant of risks in the economy and risks inherent in our portfolios; which we look to manage on an ongoing and progressive basis, taking a balanced view of both risks and opportunities available across investment markets.
- A multi-strategy fund that strives to deliver a low volatility, strong risk adjusted return stream
- Low correlation to traditional asset classes which may help diversify a portfolio
- Utilized as a core alternatives strategy within a broader asset allocation
- Directional, macro driven investment strategy incorporating global equities, debt, commodities, currencies and market hedging tools
- Tactical yet disciplined investment process designed to adjust to an ever-changing market environment
- Utilized as a portfolio completion tool to efficiently enact near term asset allocation decisions
- Fixed Income diversification strategy designed to complement traditional bond portfolios
- Macro overlay mitigates significant portfolio drawdowns
- Utilized to improve and diversify bond return sources away from pure interest rate risk
ABOUT THE AUTHOR
David Cleary, CFA is a partner and Chief Investment Officer at Crow Point Partners
He acts as lead portfolio manager on the Crow Point Portfolio Solutions and the Crow Point Global Tactical Allocation strategies. Previously he spent 23 years at Lazard Asset Management where he held a series of senior portfolio management roles over multi asset and global fixed income strategies. He additionally served as the firm’s global head of fixed income, a $26 billion platform. Prior to Lazard, Mr. Cleary worked at UBS and IBJ Schroder, mostly in fixed income asset management roles. Mr. Cleary began working in the asset management field in 1987 upon his graduation from Cornell University, with a BS in Business Management and Applied Economics. Mr. Cleary is a CFA charterholder.
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