Katch Invest

Alternatives: In search of stable rents

Alternatives: In search of stable rents

Alternatives-In-search-of-stable-rents
By Pascal Rohner – Katch Investment Group CIO

In an environment in which it is difficult to obtain high returns without assuming extremely high risks, alternative investments can be a good ally for investors. Alternative investments can be defined as those that do not meet the characteristics of traditional investments, mainly fixed-income, variable-income and monetary assets. Alternative investments can be very diverse, but as a rule they share certain peculiarities that differentiate them from conventional ones, both in the types of assets they can include and, in the strategy, implemented in the investment process.

Alternative investments have shown low correlations with traditional markets, a factor that is of great help in the process of optimal portfolio diversification, allowing the investor both to reduce global risk without sacrificing return and to increase the latter while maintaining the same level of risk. In addition, alternatives provide access not only to public markets but also to private markets, have more specialized managers, and seek a greater contribution of alpha than of beta in the origin of the performance of the portfolios. Historically, the returns on alternative investments have been on average higher than on traditional ones. This has several explanations. Typically, alternative managers invest in less liquid assets in less efficient markets, where it is easier to take advantage of market inefficiencies.

The main examples of alternative investments are hedge funds, private equity, private debt, and real assets such as real estate, infrastructure, and commodities. The year 2018 showed us that more liquid strategies, such as hedge funds and commodities, tend to have a higher volatility than traditional asset classes. They do not always help to defend investors against falls in traditional assets. For example, most hedge funds had negative returns in 2018, including strategies that theoretically should have little correlation with equities, such as market-neutral or managed futures. This can be explained by abrupt and unexpected changes in the trends of indices, sectors, and individual actions caused by political or economic events or the irrational behavior and psychology of investors. Raw materials also tend to be very volatile, including gold, which fell 1.9% in 2018.

Consequently, we favor private markets, where interesting returns are found that do not depend on the current economic situation and, more importantly, tend to be much more stable than traditional assets. Many areas of private markets have not benefited from the monetary stimulus of recent years. The returns remain relatively high because access to capital remains limited for many smaller companies. In particular, there is a very strong trend of large banks no longer lending money to small and medium enterprises as a result of new regulations on their capital reserves after the great financial crisis of 2008. This trend created an opportunity for the private sector to lend money in very safe areas with strong guarantees, generating attractive returns in the range of 5–15%. These returns do not depend on the macroeconomic environment and traditional financial markets. Extremely low default rates and short duration imply that there are only minor fluctuations, with annual volatilities below 2%. However, the alternative segment obviously requires a deep due diligence and the advice of experts in the field.

By accessing this website content, you agree to be bound by the conditions.

It is important that you read the following page before proceeding, as it explains certain legal and regulatory restrictions applicable to the distribution of this information. By accessing any content of this website, you agree to be bound by the conditions. If you do not agree to the conditions, please exit the website. Neither Katch Investment Group; Katch Fund Solutions – Global Lending Opportunities Fund, Katch Fund Solutions – Real Estate Lending Fund, or Katch Fund Solutions – Factoring Fund (the “Funds”) will be responsible for any misrepresentations you may make in gaining unauthorized access. It is your responsibility to inform yourself of and to observe all applicable laws and regulations of the relevant jurisdiction. This website content is intended to be for information purposes only and it is not intended as promotional material in any respect. The information contained in this website (including marketing presentations, factsheets, and articles) does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such offer or invitation is not authorized and/or would be contrary to local law or regulation. This website is not intended for any “U.S. Person” as defined in the Prospectus. For more information write us at info@katchinvest.com. The information contained on this site, and on downloadable materials is believed to be accurate at the date of publication, but no warranty of accuracy is given, and the information is subject to change without notice. Any opinions or estimates included herein constitute a judgment as of this date and are subject to change without notice. If you are in any doubt about the information contained herein please consult your stockbroker, solicitor, accountant, bank manager or other professional adviser. All content and information are being made available free of charge. By proceeding you agree to the exclusion of any liability in respect of any errors or omissions contained in it. No liability is accepted by any person within Katch Investment Group or the Funds for any losses or damage arising from the use or reliance on the information contained herein including, without limitation, any loss of profit, or any other damage direct or consequential.

Investment in emerging market involves risk factors and special considerations which may not be typically associated with investing in more developed markets. Political or economic change and instability may be more likely to occur and have a greater effect on the economies and markets of emerging countries. Adverse government policies, taxation, restrictions on foreign investment and on currency convertibility and repatriation, currency fluctuations and other developments in the laws and regulations of emerging countries in which investment may be made, including expropriation, nationalization or other confiscation could result in loss to the Funds. The risk factors referred to above are not an exhaustive list and reference should be made to the relevant Prospectus. The value of investments and the income from them may go down as well as up and you may not get back your original investment. The Funds are intended for sophisticated investors who can accept the risks associated with such an investment including a substantial or complete loss of their investment. Past performance is not necessarily a guide to future performance. A person within Katch Investment Group and/or Katch Fund Solutions, its affiliates, their directors and the investment funds/accounts it manages may or may not have a position in or with respect to any securities mentioned herein.This website is solely reserved to investors that are located in France and defined as Professional Investors as per the AIFM Directive, or investors that are located in Switzerland and defined as Well-Informed Investors as per the Luxembourg act of 23 July 2016 on reserved alternative funds.

Special note for investors in Switzerland: Home country of the Fund: Luxembourg. The representative in Switzerland is 1741 Fund Solutions AG, Burggraben 16, CH-9000 St. Gallen. The Swiss Paying Agent in Switzerland is Tellco LTD, Bahnhofstrasse 4, 6430 Schwyz, Switzerland. The offering memorandum and other key investor information document or fund contract as well as the annual reports may be obtained free of charge from the representative. In respect of the units distributed in and from Switzerland, the place of performance and jurisdiction is the registered office of the Representative.

If you have read, understood, and accepted above conditions, you can enter.