Fortem Capital Alternative Growth Fund

UK & EU – For professional and institutional investors only
Switzerland – this is an advertising document for professional and institutional clients as defined by the Swiss Financial Services Act only

Monthly Commentary – 30th April 2021

April was another very strong month for risk assets as markets  continue to ‘follow the data’.  Developed market equities were particularly strong, returning 4.7%. Possibly more of note  was the breather in the rotation from growth into value in April, which could be seen as slightly counterintuitive given the strength of data over the month, both in terms of economies, but also the continued improvement in vaccine rollouts. It is likely over the next few months that economic data will look stellar, and whether this causes a further ‘data-tantrum’ in bond markets will largely depend how ‘transitory’ the building inflationary pressures are.

Against the positive backdrop in April the Fund was down 0.26%.

Just as the sector rotation and inflation narrative took a breather and reversed slightly, so did the Fund’s rates strategies, namely Rates Long Volatility and Rates Curve, which were the  most significant detractors.

However, while the overall narrative shifted slightly, commodity markets took no notice as curves continued to steepen into backwardation on a combination of supply side issues and continued demand for goods in the absence of consumers being able to spend regularly on services. This led to the Fund’s Commodity Curve strategies also suffering. However, commodity curves’ natural home resides in contango, hence why the premia itself exists, and those strategies are beneficiaries of the move back, as and when it occurs. Historically when curves have been this backwardated, the prognosis for the premia has been very good.

The Fund has been relatively flat thus far this year in a severely risk on environment in which a number of premia, in particular commodity based and Equity Quality, have struggled in the face of strong reflationary growth. As the initial re-opening risk-on environment matures into something more sustained, or not, a number of premia are beginning to look  interesting once more and the portfolio is well positioned to benefit going forward, while still retaining some defensive convexity against significant market stress such as that experienced last year.

Total Return 2021 Apr
UK 100 9.3% 4.1%
US 500 11.7% 5.3%
Europe 50 12.7% 1.8%
Japan 225 5.5% -1.3%
Hong Kong 50 6.2% 1.3%
US 2000 15.1% 2.1%
BCOM 15.8% 8.3%
US Treasury -2.6% 0.8%
FTSE EPRA 9.3% 6.1%
PGF 4.5% 1.2%
AGF -0.1% -0.3%
Real Estate 7.8% 5.7%

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