NEW YORK--(BUSINESS WIRE)--Zev Marynberg, the founder and CIO of hedge fund Adar Macro Fund, one of the top performing funds of 2016 with a return of 33.5 percent, considers that in the short term financial markets face a new era of unpredictability. “June 2016 marked the beginning of a new era regarding policy and financial markets,” he claims. At least the last three decades were characterized by the rule of logic which prevailed in the case of the great majority of dilemmas. And we were witness to various forms of aid the IMF provided to the emerging economies, starting with Mexico in 1995, and Russia, Brazil, Asia, Greece and Ukraine in subsequent years. Common sense prevailed in the solution of any crisis. Applying this logic allowed one to predict future events and consequently how to invest."
Marynberg notes that "Brexit, the election in Colombia when the peace treaty was rejected, the election in Italy, where the pro-European line was defeated and finally the election of Donald Trump as President of the United States (against all expectations), point to the beginning of a new era, in which the logic we are used to no longer works”.
It is the view of the CIO of Adar Macro Fund that "the market reaction to these events is also illogical and different from what we have been accustomed to. The effects of the Brexit vote were short-term and cleared in a couple of months, except for the quotation of sterling against other currencies. In the case of the other events, the market greeted any result by celebrating. Forecasts of significant declines in financial assets in the event of a win by the Republican candidate turned out with the opposite sign, with fabulous price hikes, which is definitely what motivates investors."
For Zev Marynberg, “Experience indicates that investors seek a nominal return, and adjust their portfolio to achieve that performance. When interest rates fall, they buy low-quality assets indiscriminately. Conversely, when rates are high, they only buy low-risk assets with scarcely any level of investment in risky assets."
“Rates have been low for many years, which according to this premise should mean the quality of investment portfolios is not very good, with a nominal return being the main feature. History also teaches us that such low interest rates cannot last as long as they have. It is essential for interest rates to rise so that central banks at least have the tools to perform some sort of function in the next crisis.” Marynberg predicts that “the most affected could be bonds with a higher correlation with those of 10 to 30 year maturity issued by the United States."
Adar Macro Fund
Adar Macro Fund is a hedge fund managed by Adar Capital Partners.
Founded in 2011, Adar Capital Partners Ltd. provides investment advice
to institutions, family offices and private equity funds mainly in Latin
America and Europe. It currently manages a total of over 1.5 million
assets. In 2016 Adar Macro was awarded the prize for "Best
investment fund for Latin American emerging markets - 3 years" by
Acquisition International and "Most innovative hedge fund of 2016"
by Wealth & Finance. Bloomberg Ticker: ADARMAA KY.