Economy & Capital Markets:
In June the US Fed, improved expectations of 2021 growth to 7% and inflation to 3.4% and, indicated that they expect to increase interest rates to 0.6% in 2023, a long way off.
The PB of China views: resident consumption constrained, problems for small businesses and fiscal imbalances for several regional governments. However, in a refreshing contrast to western bureaucrats, will maintain money supply and leverage in-step with economic growth. It will manage the RMB with reference to a basket of currencies, currency flows and balance of payments. It also seeks to improve bond default resolution and to stabilise land and house prices.
Kings’ Portfolio (Global Mega Cap Long/Short Equity Investing):
In the first half the dollar portfolio returned 5.48% with a 0.7 Sharp, whilst the S&P500 returned 14.42% and the ACWI 12.34%. The portfolio suffered a 6% decline in the last month impacted by market rebalancing to accommodate the US Fed’s interest rate expectation. Japanese basic material companies: Tokai Carbon and Ube Industries contributing -1.4% and -1.1% to the fall. US healthcare company Evolent Health and shorting UK technology company Micro Focus also contributed -0.75% and -0.63% with, the portfolio’s natural US dollar short position adding -0.98%. At the end of the period the portfolio held a very conservative 65% in cash.
Belsize Strategy (Macro & Global Futures Trading):
With the advancement of the firms AI abilities, this long-standing strategy which provided excellent returns during the 2007/8 financial crisis was restated in May. A small loss was reported, inline with expectations that were impacted by the US Fed’s acknowledgement of a need to bring forward interest rates increases. Operational procedures are developing.
Private Equity Strategy (Illiquid Investments):
During the period the firm added five position (including reservations) to its first venture capital investment in 2019. Sector breakdown now stands at: 29% media & entertainment, 22% communications, 18% real estate, 18% finance and, 8% food and beverage. The technology breakdown in the portfolio consists of 60% apps, 20% hardware, 10% sharing economy and 10% e-commerce. The firm makes no positive discrimination except for the combination of good ideas and teams, however the initial investment was to a female managed business and, we have further invested in one black and two Latin managed businesses.
Crypto Currency Strategy (Inter-day Trading):
Due to the rapid development of the firm’s proprietary AI, in June a crypto trading strategy was initiated, across 11 currencies each with a market capitalisation over $1Bn. Operational activities are being fine-tuned to accommodate the AI decision-making within the firms risk limitations. The results were inline with expectations given market conditions, with a small profit. This strategy is not expected to be available for external parties.
Artificial Intelligence & Technology Development:
During in the first month of the quarter the firm completed its software development target for the year. Apart from further improved accuracy of decision making, a surprising offshoot was increased speed. This has allowed far greater diversification across instruments and time horizons.
Firm Operational Update:
Since 2015 the firm has been maintained as a Californian Registered Investment Advisor (RIA) within FINRA and SEC USA government oversight. At present the firm’s administrative headquarters are in London, UK; if global travel restrictions return to pre-Covd levels we expect this to be more fluid.