April 2020 – Historic recovery

In April the two funds for which we have more investment flexibility, posted positive YTD returns:  Sigma Fund Real Return reaches +2.38% and Sigma Fund Prudent Growth +4.08%. Sigma Fund Quality Stocks (unhedged equity) posted MTD returns of +14.28% (-1.7% YTD).

The key factors in our management these last two months of sharp rises and falls were:

1)            Having a clear investment objective

2)            Being faithful to this objective during the crisis

Our main investment objective is to increase investors’ capital in the long term; and you should expect us to adhere to this priority. This is why in March, after carefully analysing market dynamics and risks, we took on higher volatility than our long term reference rates: The cost of lowering volatility could seriously compromise long term return objectives.

On the other hand, being faithful to our investment objectives may seem a truism: we all agree that the best policy is to buy when prices have fallen and to sell when they are expensive, but when push comes to shove almost everybody does just the opposite. We were able to act quickly and in line with our priority objective because we had a predefined strategy to be implemented in crisis times. The professionals which are under high stress –military, anti-mine soldiers, and surgeons and anaesthesiologists– act on strict protocols that curtail improvisation. Such protocols are designed, analyzed and tested before a crisis actually occurs to ensure correct execution. In the financial arena, although investor’s lives are not at risk, their future quality of life is. Investors have to confront having their assets amputated without anaesthesia. This is when investment management becomes critical and managers and investors need to be perfectly aligned to ensure the right decisions are made.

Over this crisis, we increased one-on-one calls with clients to ensure they had first hand knowledge of our actions and the real long term capital loss risk they were taking, which was considerably lower than that suggested by market volatility. Your forbearance and trust has been the key to correctly implementing our strategy.

Crises are inherent to humanity; there will be more in the future and we need to take advantage and learn the most from each of them; we feel that the best strategy we can follow is the one that has always worked for us: having a clear objective, an action protocol and the complete commitment of all involved.  

Personally, we can’t be prouder or more grateful to you for your exemplary behaviour as investors and clients; your support and influence strongly reinforce our investment strategy. The Altex team wishes you all strength and serenity to conquer these difficult times.