June 2023 – Teks Alpha Preliminary NAV Systema Fund

Market Overview

June was another eventful month for the financial markets, with the Federal Reserve halting its series of rate hikes during the June 13/14 meeting. This decision, combined with soaring expectations in AI technology, catalyzed a substantial rally in the SPY and across other markets.

The Fed's next scheduled meeting is now scheduled for late July, with a potential increase of 25 basis points.

Throughout June the SPY posted a significant gain of +6.4%, marking its strongest monthly performance since last October. It also recorded a YTD surge of +15.9%, the most vigorous first-half performance since 2019. In tandem, the Nasdaq Composite performed +6.6% (YTD +31.7%), its best first half-year performance since 1983.

Needless to point out, technology stocks were the star performers, again. It is important to point out that seven stocks now represents 30% of the S&P 500 Index.

Inflation and interest rates persisted as the dominant themes influencing market activity. As we transition into July, both investors and market watchers will attentively examine the Federal Reserve's forthcoming policy adjustments and macroeconomic indicators.

We are inclined to believe that several indicators point to a deceleration and some items are concerning (credit card debt, among others)

Performance

During June the Fund’s preliminary net return was -1.5%, bringing the 2Q performance to a close at +5.90%. Our YTD net performance now stands at +11.64%.

We are very comfortable with the performance of our model, which has once again demonstrated its resilience to substantial market fluctuations while maintaining a robust risk management. The second quarter marked a phase of significant investment in our internal technology infrastructure. Our expenditures encompassed new hardware and proprietary software, all with the aim of bolstering our model's stability and performance under any market conditions.

We are confident that these investments will further improve our already solid track record and will deliver outstanding returns. We are also fully committed to exceptional risk management as we grow our assets and team. We have used two different capital allocation models (one aggressive and one conservative), to test the model’s boundaries.

Reflecting on our performance to date and considering the enhancements made to our model, we sustain our goal of a +3 to +4% net monthly return over time, taking into account the effects of time decay

Teks Alpha Performance (%)

Teks Alpha Performance vs Benchmarks since inception (March 2021)