Insights into the Alternatives Sector

FundMonitors.com

July 2025

Chris Gosselin interviews Simone Haslinger from East Coast Capital Management and Clint Maddock from Digital Asset Funds Management to explore how their alternative investment strategies offer diversification from traditional markets.

Simone outlines ECCM's systematic, trend-following quant approach across global futures markets, boasting low correlation with equities. Clint presents DAFM's market-neutral, high-frequency trading in digital assets, delivering strong returns even during equity drawdowns.

The discussion covers AI adoption, the impact of Trump-era uncertainty, and challenges like investor education and crypto counterparty risk. Both managers highlight how their strategies enhance portfolio efficiency and thrive in volatile or dislocated markets.

Hedge Clippings | 18 July 2025

Yesterday's release by the ABS of the June, Labour Force estimates for June which showed an increase in unemployment in trend terms to 4.2%, and to 4.3% in seasonally adjusted terms, had plenty of economists and commentators weighing into the Reserve Bank for not cutting rates 10 days ago, basically saying "I told you so!" - or more accurately trying to excuse themselves for getting their prediction wrong.

For instance, the ABC news quoted one economist (presumably one of the 32 out of 36 who got the RBA's call wrong) as saying "the RBA's decision to leave rates unchanged felt misguided in the moment and has aged like milk." There were plenty of others who presumably also had their professional ego's dented, making comments along the same lines.

We beg to differ on a number of counts:

Firstly, in their post-meeting statement, the RBA "judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis". That information - the June quarter CPI number - is due on the 30th of this month. Again, quoting from the RBA's statement, the board will "pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market".

Secondly, although the monthly unemployment number ticked up, overall, the employment market is strong. Employment growth over the past year to June is at 2%, close to the RBA's forecast of 2.1%. One month's employment data by itself is not sufficient to claim the RBA got it wrong - unless you're one of those who called it wrong, and want to justify why.

Thirdly, although you wouldn't notice it from the performance of the S&P 500, the level of global uncertainty remains high from both an economic and geopolitical perspective. That's unlikely to change any time soon.

So, waiting five weeks until the next meeting on the 12th of August seems pretty logical - and cautious. Even if the quarterly CPI does come in lower than - or as expected - the RBA isn't - and shouldn't be - in the guessing game. That's for the punters - and economists.

While on the subject of forecasting and getting things wrong, analysis of the performance of the 17 peer groups in AFM's database clearly shows that those who thought cryptocurrencies and digital assets were a worthless fad a few years ago have certainly been proven wrong:

(Source Fundmonitors.com. Average net returns of all funds in each peer group, assuming reinvestment to June 2025.)

Aside from the obvious outperformance of Digital Assets, led by DAFM's Digital Income Fund Bitcoin Class, which has provided investors 91.10%, 95.09% and 83.01% over the past 1, 2 and 3 years, the other interesting point to note is the reasonably consistent performance of each peer group, particularly over 1-3 years. Less so over 5 and 7 years, which include Covid-affected markets.

Headline figures such as these also obscure the extreme range of many other underlying funds' performances, and in many cases the volatility of individual funds' returns.

For instance, the Equity Long, large-cap global group produced an average return of 16.77% over 12 months to June, with performances ranging from 96.67% down to -6.11%. 3-year returns among the same peer group ranged from +38.76% down to +3.14%.

Meanwhile, while 1-year returns can sound attractive, all offer documents will advise investors to take a 5-7 years view when investing.

High returns are obviously attractive, but by themselves can mask drawdowns and volatility, which often don't match an investor's risk profile or tolerance.

Diversification is one potential solution, either across asset classes or peer groups. We spoke at length (25 minutes) this week with two managers in the alternative space, Simone Haslinger from East Coast Capital Management, a trend following futures strategy, and Clint Maddock from Digital Asset Funds Management. You can watch the video here.

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Disclaimer

Past performance is not a reliable indicator of future performance. Fund returns are quoted net of all fees, expenses and accrued performance fees. Delivery of this report to a recipient should not be relied on as a representation that there has been no change since the preparation date in the affairs or financial condition of the Fund or the Trustee; or that the information contained in this report remains accurate or complete at any time after the preparation date. Equitable Investors Pty Ltd (EI) does not guarantee or make any representation or warranty as to the accuracy or completeness of the information in this report. To the extent permitted by law, EI disclaims all liability that may otherwise arise due to any information in this report being inaccurate or information being omitted. This report does not take into account the particular investment objectives, financial situation and needs of potential investors. Before making a decision to invest in the Fund the recipient should obtain professional advice. This report does not purport to contain all the information that the recipient may require to evaluate a possible investment in the Fund. The recipient should conduct their own independent analysis of the Fund and refer to the current Information Memorandum, which is available from EI.