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10 min read | Global markets recovered strongly during the fourth quarter, aided by falling inflation expectations, optimism that the US Federal Reserve would move away from aggressive policy tightening, an improved energy outlook in Europe, and President Xi’s unexpected decision to unwind zero-COVID policies. The rally was certainly welcomed, but 2022 was the most challenging year since the global financial crisis. According to Michael Howell of CrossBorder Capital, global investors lost US$23T of wealth in housing and financial assets in 2022, equivalent to 22% of global GDP and greater than the US$18T of losses suffered in the 2008 financial crisis. Commodities were the only refuge, as long-term bonds had their worst year since the 18th century (according to the Financial Times) and and equities fell 18.1% in 2022 (MSCI World Index), as measured in US dollars.

Quarterly Letter

10 min read | Global markets recovered strongly during the fourth quarter, aided by falling inflation expectations, optimism that the US Federal Reserve would move away from aggressive policy tightening, an improved energy outlook in Europe, and President Xi’s unexpected decision to unwind zero-COVID policies. The rally was certainly welcomed, but 2022 was the most challenging year since the global financial crisis. According to Michael Howell of CrossBorder Capital, global investors lost US$23T of wealth in housing and financial assets in 2022, equivalent to 22% of global GDP and greater than the US$18T of losses suffered in the 2008 financial crisis. Commodities were the only refuge, as long-term bonds had their worst year since the 18th century (according to the Financial Times) and equities fell 18.1% in 2022 (MSCI World Index) even after rising 9.8% in the fourth quarter, as measured in US dollars.

Altrinsic Global Advisors, LLC today announced the appointment of Jeffrey Kazen as Head of Operations & Technology.  Kazen will oversee all aspects of operations, trading, trade support, technology, and vendor management, as well as be involved in other organizational initiatives.

2 min read | by Glenn Cunningham | I recently attended the Industrial Manufacturing Technology Show (IMTS) in Chicago to gain further insight into the technology and industrial industry ecosystems. Discussions at the show reinforced a number of key themes that we have independently identified through our bottom-up research. Broadly speaking, these include the need for more automation due to skilled labor shortages, the costs and benefits of supply chain fragmentation, and the growing integration of technology across the industrial landscape.

The downturn in markets continued during the third quarter as concerns over tightening monetary policy, inflationary pressures, weakening economic growth, and geopolitical risks intensified. Despite strong gains early in the quarter, the MSCI EAFE Index declined 9.4% (as measured in US dollars), ending approximately 27% below peak levels reached in September 2021. The Altrinsic International Equity portfolio declined 9.8% over the same period.

Greed has given way to fear. We have not reached a stage of extreme capitulation, liquidity unwinds, or distress, but fear emanating from headlines and market declines is reflected in poor investor sentiment and the growing presence of value.

Quarterly Letter

The downturn in markets continued during the third quarter as concerns over tightening monetary policy, inflationary pressures, weakening economic growth, and geopolitical risks intensified. Despite strong gains early in the quarter, the MSCI World Index declined 6.2% (as measured in US dollars), ending approximately 22% below peak levels reached in September 2021. The Altrinsic Global Equity portfolio declined 8.2% over the same period.

Greed has given way to fear. We have not reached a stage of extreme capitulation, liquidity unwinds, or distress, but fear emanating from headlines and market declines is reflected in poor investor sentiment and the growing presence of value.

A confluence of factors, including inflationary pressures, tightening monetary policy, weakening economic growth, and intensifying geopolitical unrest, continued to challenge emerging markets (MSCI EM -11.6%) in the third quarter. The Altrinsic Emerging Markets Opportunities portfolio declined 8.2%, outperforming the MSCI Emerging Markets Index by 3.4%, as measured in US dollars. Outperformance was derived from individual stock selection in the financials and consumer sectors, our differentiated and overweight positions in Brazil and Mexico, our underweight exposure to China, and specific stock selection in China.

Uncertainty stemming from inflationary concerns, tightening central bank policies, and prospects of slowing economic activity weighed on emerging markets.  Unlike previous drawdowns, emerging market equities fared better than broad markets (MSCI EM -11.4%, MSCI ACWI’s -15.7%).  The Altrinsic Emerging Markets Opportunities portfolio outperformed the MSCI Emerging Markets Index in the second quarter by 0.6%, as measured in US dollars.   Like most equity portfolios, ours was not immune to the market downdrafts, but we are confident in our positioning and encouraged by the investment propositions offered by a growing number of companies with strong long-term fundamentals and attractive valuations.  Key contributors to our relative outperformance included our differentiated exposure to real estate, our overweight position and select investments in India, and our underweight exposures in materials and information technology.

Quarterly Letter

Global equities delivered their worst quarterly performance since the European sovereign debt crisis as uncertainty stemming from inflationary concerns, tightening central bank policies, and rising recession risk weighed on markets.  The Altrinsic Global Equity portfolio declined 10.9% during the second quarter, outperforming the MSCI World Index’s 16.2% decline, as measured in US dollars.   Outperformance was derived from all major industry exposures except real estate, materials, and utilities.  We take no consolation in our relative outperformance during this painful drawdown.  Near-term macro data and corporate earnings will likely be disappointing, but we are confident in our positioning and encouraged by the investment propositions offered by a growing number of companies with strong long-term fundamentals and attractive valuations.

International equities delivered their worst quarterly performance since the European sovereign debt crisis as uncertainty stemming from inflationary concerns, tightening central bank policies, and rising recession risk weighed on markets.  The Altrinsic International Equity portfolio declined 11.5% during the second quarter, outperforming the MSCI EAFE Index’s 14.5% decline, as measured in US dollars.   Outperformance was derived from all major industry exposures except real estate and utilities.  Japanese and European-based companies with meaningful US dollar exposure were notable outperformers, benefiting from the relative strength of the US dollar versus most other currencies.  We take no consolation in our relative outperformance during this painful drawdown.  Near-term macro data and corporate earnings will likely be disappointing, but we are confident in our positioning and encouraged by the investment propositions offered by a growing number of companies with strong long-term fundamentals and attractive valuations.

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