Letter to Robin Capital Group Clients
December 30th 2022
Dear Investors,
First and foremost, I would like to begin by thanking you for putting forth your confidence in Robin Capital Group. All of you have entrusted RCG with your capital in the face of extremely challenging market conditions. I am very proud of the work put in as well as the results achieved in 2022. This was an important year for the firm, as we launched our three discretionary managed strategies in April of 2022: Dynamic Macro, Inflection and Safe Haven. Given our launch date, our live track record missed capitalizing on what was the strongest quarter of the year. In spite of this, our investors and clients should be pleased with the results obtained as we close the year with double-digit net positive returns across our three flagship strategies. Meanwhile, most benchmarks, indices or other passive market trackers approach year end with double digit losses. The year properly tested our tech infrastructure, operational readiness and alpha generation capacities. Similarly, our partnership with Interactive Brokers, our core operating platform, provided the resiliency, transparency and stability needed to support our business and allowed us to focus on creating value for our clients.
2022 Market Highlights and Takeaways: Many market participants failed to accept or understand the implications behind monetary policy tightening on behalf of the Federal Reserve and Global Central Banks. Low rate, easy money environments create more than inflation, they create complacency for businesses and investors. The FEDs aggressive quantitative tightening and over 400 basis point rate hikes in a single 12-month period rattled financial markets, global economies, and exposed multiple themes that we had been discussing and anticipated would occur with this change in regime:
- Passive investing is the utmost expression of complacency.
- Valuations were severely stretched and fundamentals had decoupled from fair value.
- Market structure has changed. Not just by the number of algorithmic traders, but by the amount of liquidity takers disguised as liquidity providers.
- Marketing is an expense, not an investment thesis.
- When monetary and fiscal policies conflict, remedial attempts to control inflation fail and pain is prolonged.
- Where there is pain, opportunity abounds.
Our Offering: RCG’s discretionary strategies have been overwhelmingly well received by our investors considering the simplicity, transparency and ability to scale that the Separately Managed Account design offers. By providing less individual investment alternatives and focusing strictly on risk profiling within RCG strategies, we are able to efficiently deploy capital with a full or partial allocation within our actively managed strategies to meet our clients risk appetites and liquidity needs. This allows our team to dive deep into the portfolio constituents themselves and actively manage each strategy within their risk parameters.
Our Team: Given our strong results, positive feedback and asset growth since launch, we expanded our team and officially welcomed Stefan Lingmerth to RCG this year. Stefan is an experienced portfolio manager and an expert in analyzing the intricacies of public and private companies. He became a proprietary trader with T3 Trading Group upon relocating to the Miami area in 2020. Prior to this, he developed his track record as a Sr. Portfolio Manager at Phoenix Investment Advisor LLC in New York, where he focused on value investing in public markets and distressed debt for 14 years. Stefan and I have collaborated in many ways since the start of the pandemic and share the same values and principles required to always advocate for our clients and investors.
We are well positioned to continue to deliver strong results in the new year and will naturally be focused on expanding our AUM for this product offering in 2023. Your continued support as a referral source is truly appreciated and will make all the difference in reaching our growth objectives. If you know of others who would be interested in our offering or could benefit from our expertise, we kindly ask that you refer them to RCG.
I personally want to thank you all again for your trust and wish you much success in the year to come. Our team is extremely excited to continue working on your behalf and helping you achieve your financial goals.
Sincerely,
Nicolas Diaz
Chief Investment Officer