January 2024 – Teks Alpha Preliminary NAV Systema Fund

Market Overview

The stock market had another positive month in January as it responded positively to favorable economic data. Throughout January the SPY posted a return of +1.59% (same YTD).

The S&P continued its gains from December (4.42%) and November (8.92%) for a third consecutive month, resulting in a strong 15.54% three-month rally as the economy continues to show strength. Market now expects that the Fed will cut rates in May/June, instead of March. On the other hand, the Nasdaq Composite performed +1.0% (same YTD). On the Fixed Income side, the 10-year Treasury yield was roughly flat, starting and ending the month at 3.86%, despite peaking at 4.18% on January 23. Yields on the 2-year Treasury dropped in January, starting at 4.25% and falling to 4.19%. High-yield bonds were flat.

The recession that economists broadly feared in 2023 never showed up. The U.S. economy grew 3.1% over the past year, thanks to a resilient labor market that supported strong consumer spending. The final three months of the year looked a lot like the so-called soft landing Federal Reserve officials are trying to achieve. Growth was strong, while inflation cooled to an annualized rate of 1.7%, below the Fed’s target inflation rate of 2%.

After two years of soaring home sales that started during the pandemic, the housing market skidded to a halt last year. Home sales last year dropped to the lowest level in nearly three decades after elevated mortgage rates and a lack of homes for sale frustrated buyers. Existing-home sales dropped 19% in 2023 from the prior year to 4.09 million, according to the National Association of Realtors. That total was lower than during the subprime crisis and the lowest full-year level since 1995.

February will continue the earnings watch as retail reports come in, along with the market sizing up if the consumer will continue to spend (and charge). The focus on politics will also continue to grow, as the possible Biden-Trump rematch buzz has already started to filter into the general public, even though the primaries have just started. Typically, the Street will start to take market positions on the expected November outcome in September, as a clearer picture on not just the presidency emerges, but that of the House and Senate.

Teks Alpha Performance (%)

2021 1.36 0.79 0.77 0.80 1.51 1.61 1.15 2.56 1.70 0.05 12.9
2022 -0.65 1.22 1.22 -0.10 -1.85 -5.7 2.35 -1.61 -0.5 0.33 -3.1 -0.7 -9.0
2023 3.5 0.45 1.45 2.20 5.20 -1.50 0.2 1.10 -1.50 -0.3 0.6 0.35 12.0
2024 -0.75 -0.75
Performance is net of fees. Trading started on March 12, 2021. NAV is calculated quarterly by the Administrator. The next official NAV will be based in December 2023

Teks Alpha Performance vs Benchmarks since inception (March 2021)

Effective 14.22% 28.68% 12.27%
Annualized 5.06% 10.21% 4.37%
STD Dev 6.63% 17.64% 6.44%
Shape Ratio 0.31 0.41 0.21
Benchmarks: The HFRI Institutional Equity Hedge Index is a global, equal-weighted index of hedge funds with minimum assets under management of USD $500MM which report to the HFR Database and are open to new investments. The Equity Hedge funds that comprise the index are a subset of the HFRI Institutional Fund Weighted Composite Index. The index is rebalanced on an annual basis

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Legal Disclaimer

The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. This material is not an offer, solicitation or recommendation to purchase any cryptocurrency, security or to invest in Teks Capital or in Systema Fund PCC. Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of any market, or of any specific investment. Please remember that all investments carry some level of risk, including the potential loss of principal invested all principal. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. Please remember that past performance may not be indicative of future results.