The Crow Point Partners Liquid Alternative Funds lineup posted very strong performance results during the third quarter of 2018, exceeding return targets while maintaining overall low levels of portfolio volatility. The strategies have remained focused and allocated to the investment opportunities in the United States as strong economic growth and earnings continued to drive equity prices higher. Both the Multi-Alt and the Global Tactical strategies benefited from effective security selection in small cap stocks as well as hedging systemic risk by shorting emerging markets. Idiosyncratic trades such as shorting Tesla and going long Amarin also benefited portfolio returns. The Alternative Income strategy has generally avoided interest rate risk this year and has focused on credit and equity risk as better risk adjusted opportunities in a growing economic environment.
Longer term strategy returns have remained compelling and as such, we continue to get high marks from independent, money management research firms. From our standpoint, accolades such as this are an indication of a proof of concept for our alternatives platform, where we continue to believe that decreased correlations between asset classes, countries, sectors and companies create a ripe environment for active decision makers, particularly when held together by an active macroeconomic and risk management framework.
Going forward, we continue to believe that we are in an environment that should be constructive to investment risk takers. Continued strong economic and profit growth should drive markets to new highs. We continue to believe that market concerns over trade negotiations and gradual Federal Reserve rate increases are excessive and should not derail an otherwise strong investment landscape.
The two big questions that remain in our minds as we enter the fourth quarter, center around fiscal policy risk both in the United States and abroad. Primarily, will the contentious political environment in Washington and the midterm elections result in a change in the pro-growth fiscal policies which have benefited the economy over the past several years? And secondly, will fiscal policy decision makers in international markets; Italy, Brazil and Turkey embark on a constructive policy path which will allow for improved investment market returns? International markets are cheap, yet an improved policy environment is likely required to catalyze that opportunity.
Overall, we believe that policy issues will be constructively resolved and as such, we remain optimistic that the environment for investing remains compelling and that our active decision making process and risk framework can continue to provide strong risk adjusted returns for our clients.
ABOUT THE AUTHOR
David Cleary, CFA is a Principal and Portfolio Manager at Crow Point Partners
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.
To read David Cleary's full bio or other Crow Point team members, click here.