Mark Caslin founded Alder Capital in 2000. As CEO and Chief Investment officer, Mark leads a highly talented research team with a target to provide robust solutions that match investors’ needs. Mark has over 24 years’ experience researching, developing and operating quantitative investment models. He honed his skills as General Manager and Head of Research at Beacon Systems Ltd, before taking over the systematic trading processes of sister company Gaiacorp. Mark is both an Entrance Exhibitioner and a Scholar of Trinity College Dublin from which he holds a B.A. Mod. in Mathematical Sciences. Here he takes us through the Alder Global 20 Currency Program and fund strategy.
What are the benefits of investing in the Alder Global 20 Currency Program relative to other asset classes?
In investing there is a “free lunch” – it comes from good portfolio construction. We all want return and less risk. If you combine assets classes that have their good and bad periods at different times you will still get the average of the returns but you will have much reduced risk – always a good thing. Our Currency Program is quite unique because we tend to make our returns at different times to both equities and bonds, a rare gem in the investment world. So, we fit very well into a portfolio of assets and give the investor a more stable portfolio value through time. We recommend that investors combine our currency program with other asset classes so that they complement each other and create a more stable portfolio value.
Can you give a brief outline of the fund’s investment process?
There is 5 trillion USD traded in the Foreign Exchange markets each day which is about 10 times the combined amount traded in equities. We trade all the crosses of the most liquid currencies namely, the Euro, USD, JPY, GBP, CAD, AUD and SEK. We use Foreign Exchange and Interest Rate market data and create a directional forecast and risk forecast. We have five distinct models which determine our positioning, which is continually updated throughout the day.
Relative to global equities and other sectors, how has the fund performed historically?
We launched in February 2001 and over this 17+ year period we have out-performed most world equity and bond indices, with an annualised return of 6.15%pa (Feb 2001 to May 2018). Importantly we made positive returns during the tech-bubble collapse and the Global Financial Crisis. This was a great comfort to our investors who were holding an asset in their portfolio that was making positive returns at a difficult time for other markets. In 2017 we returned +8.6% for investors.
Is there an environment in which that the AG20 fund performs best?
Post the financial crisis, central bank policies have been kind to both the equity and bond markets, but with quantitative easing coming to an end, can this last? By contrast this should create an enhanced opportunity set for us. In the past traditional market crises have created trends in currency markets which have suited our strategies and generated positive returns for our investors. Rising interest rates, and more volatility in markets, traditionally have been good markets for us. We are optimistic that the macro environment in the next 3 to 4 years will be a favourable market for currencies.
In terms of risk, what profile of client is best suited to the Alder AG20 Currency Fund?
Our Currency Program has a risk rating of 5 on a scale of 1 to 7, so as a stand-alone investment it is considered medium to high risk, similar to an equity portfolio as we do have both winning and losing periods. When added to other assets that tend to have their ups and downs at different times, our program can help to reduce the overall risk in the portfolio, so it suits investors looking to construct a strong stable portfolio. This would typically be an investor who is familiar with investing, understands the “free lunch” in investing is portfolio diversification, understands there is no “all weather” asset class, each will have their own positive and negative periods, however together they can achieve a stronger more stable return which can beat cash and inflation over the long term.
To speak with a portfolio manager or account executive today, please phone the Cantor Fitzgerald dealing desk on 01 633 3633.
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Source: Alder Capital DAC
Past performance, correlation and risk reduction may not be a reliable guide to future performance, correlation and risk reduction.The returns shown above were not achieved without risk of loss. The Alder Currency Programs uses leverage; investments may be subject to sudden and large falls in value. Opinions, estimates and projections in this document constitute Alder Capital’s judgement as of the date of this document and are subject to change without notice.This is a financial promotion and is not intended to constitute investment advice. Alder Capital DAC is regulated by the Central Bank of Ireland. Alder Capital is registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission and is a member of the National Futures Association.