Alternative Investment Portfolio – September 2024

The equity market has been in a tear and recently China joined the party

“Conventional wisdom has been pointing to a rough end of the year for investors. However, the US Federal Reserve pulled off a masterstroke by aggressively cutting interest rates without sparking fears of an impending recession. Since then, the sentiment has shifted: what if risky assets don’t just hold steady, but melt up?”

Historical Trends Support This: US rate cuts around a recession typically coincide with declines in stocks and other risky assets. But when the economy is stable, as it seems now, markets tend to surge.

Deutsche Bank examined the past 70 years of US rate-cutting cycles. They found that the S&P 500 tends to fall over the following months if rate cuts are tied to a recession. However, when rate cuts occur without a recession, markets often soar. According to strategist Jim Reid, the median gain in such scenarios is nearly 50% two years later.

Reid also notes that this time, US stocks have already surged ahead of the cuts, marking the biggest pre-easing rally in 70 years. So while a 50% gain may be optimistic, there’s still potential for upside.

One key reason is the Fed’s proactive approach—steering the economy away from a potential jobs market crash before it happens.

Lombard Street Research, now TS Lombard, echoes this sentiment, suggesting a “melt-up” in risky assets is on the table.

Earlier this year, many feared rising interest rates would devastate corporate balance sheets, leading to widespread defaults. However, that scenario never materialized. Instead, data from S&P Global shows that the trailing 12-month US corporate debt default rate has already begun to fall, dropping from 4.8% in June, with forecasts suggesting it could fall as low as 2.75% by next June in an optimistic scenario.

And the surprise support doesn’t stop there—China, despite its rough market performance this year, has rolled out a safety net for its economy, potentially providing a tailwind for global investors. European markets are catching on too, with Barclays dubbing this an “early Santa rally.”

At this point, it feels like you almost have to search for reasons to be pessimistic. The US economy is holding up, and central banks seem to have investors’ backs. The path of least resistance? More gains—potentially even rapid ones.

The biggest joker in the pack could be the escalating Middle East conflict and spiraling Oil Prices.

However, it is best to follow moderation and remember the words of Warren Buffet ” Be Fearful when everyone is greedy”.

Below are the key new updates on the various delays across Alternative Investment platforms.

• Growpital Freeze Update
• Wisex Fiasco

Growpital Freeze Update

Update on SEBI matter:

This is the first time that a ray of hope has developed in getting back part of the principle. In the latest SAT  hearing, the jury thought that money kept frozen in Zetta Farm bank accounts should be returned to investors. Now the final verdict is pending for mid-October. Hopefully, investors will be able to get back part of their capital. The expected amount is approx INR 55 Crores which is approx 27% of the invested value.

Mr Upadhyaya has summarized the outcome in the video.

Wisex Restructuring

Recently there has  been a major restructuring in Wisex, the fractional ownership platform that was bought by Aurum. They have fired the complete existing team along with the Ceo, Aryaman Vir.

Below is the link to the news article.

Due to this issue, there has been delay in payment of one of the assets on the platform, Attic. There has been no point of contact for most investors. At this point, investors should reach out to the compliance team of the platform as it a listed company and has a grievance officer.

Alternative Investment Portfolio Updates

This month we explored an alternative investment product from Policy exchange with 13%+ return with tax exemption

Some of the key interesting opportunities for the month are –

• Policy Exchange PTC product
• AltDRX Pune Godrej Opportunity

Policy Exchange PTC product -13% Government Bonds

Policy Exchange Early Access

 Below is the process of Insurance Policy PTC

• Investors purchase PTCs (Pass-Through Certificates) issued by a Securitization Trust
  sponsored by FairValue
•  The Trust purchases separate individual policies for each PTC holder
•  The policies are acquired at a calculated surrender value (which is at a discount to the
  fund value) giving an IRR of @13% to the investor
• Funds are kept in Max Secure Fund which has given a return of approx. 7% in the past
  year
• At the end of the lock-in period, the policy is liquidated, and the fund value is paid to the investors
• The life insured not only gets a monetary payment but also continues to have a partial life
  cover after the assignment.
• In case of death, the sum assured minus the Investor’s return is paid to the nominee

Safeguards for investors

1. The investors’ funds are fully secured by way of an underlying portfolio of G-Secs & Liquid investments of Max Life Secure Fund
2. Trust is governed by Catalyst Trusteeship Ltd., one of the largest SEBI registered debenture trustees in India managing over 80000 crores of AUM.
3. In case of death of the life insured, the death claim is split at the insurer level as follows:
   – Investor’s investment amount +IRR returns given to the investor
   – The remaining amount is given to the Life Insured’s nominee
4. Next issue of PTCs is being rated by CARE

We are planning to do a webinar with the founders this month- Register here

ALTDRX  Opportunities (15-17%IRR)

 

Pune Under construction

AltDRX has launched multiple projects targeting different investment objectives. Some of the best opportunities include

• Kerala Holiday Home
• Pune Underconstruction Godrej Property
• Hyderabad Land

AltDRX has also launched a private opportunity where market makers can get a 15% fixed+ Revenue Share. However, this opportunity is available only for a few anchor investors. You can register and we can connect you to the point of contact for this deal.

Lending Investment

 

Randomdimes Youtube

Short Term Investments