stewards investment capital
TRANSCRIPT
SPECTRUM GREAT RESET PORTFOLIO
Stewards Investment Capital
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Investment Spectrum Great Reset Portfolio
Investment Focus Generate capital growth via active selection of digital and alternative assets
Reporting Currency USD
Minimum Investment USD 100,000 (Minimum additions USD 10,000)
Risk Profile High
Investment Horizon More than 5 years recommended. No lock-in period.
Redemption Notice 30 business days
Investment Manager Stewards Investment Capital
Administrator International Assurance Limited
Technology Partner Arrel Technology
Auditor Ernst & Young
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INVESTMENT OBJECTIVE
The Great Reset agenda as proposed by the World Economic Forum have three primary components. • Steer the market toward fairer outcomes• Ensure that investments advance shared goals, such as equality and sustainability• Harness the innovations of the Fourth Industrial Revolution to support the public good, especially by addressing health and social
challenges
The Great Reset
The Great Reset Portfolio aims to grow and protect wealth during a period of anticipated change in the structure of the world’s economic and financial systems as a result of the events of “The Great Reset”.
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OUR EXPECTATIONS
Cryptocurrency
The Great Reset lays the groundwork to expand the power and reach of international bureaucratic organisations and national governments. An agenda of centralised planning could in time threaten personal privacy and personal financial freedoms.
We anticipate the following outcomes on a global scale as a result of the “The Great Reset” agenda as proposed by the WEF:
• Proliferation of the welfare state and roll out of universal basic income (UBI)
• Higher taxation to support amongst other topics the green agenda & climate control
• Greater financial surveillance
• Capital controls
• Further expansion of the money supply through financial stimulus
• Interference in the mechanism of free market dynamics
• Loss of purchasing power of fiat currency
• Introduction of Central Bank Digital Currencies (CBDC’s)
Our expectation is that traditional assets will come under pressure and traditional investment strategies are not equipped to deliver on targeted returns in a period of global financial, economic and social change.
The Great Reset
Deleted Tweet from the World Economic Forum Twitter account
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Cryptocurrency
Macroeconomic Backdrop to The Great Reset
1.Central Bank Monetary PolicyAggressive central bank monetary policy global including low interest rates and expansion of the money supply
2.The “Everything Bubble”Asset price bubbles and the inevitability realignment of asset pricing
3.Global Economic GrowthCovid 19 pandemic and subsequent lockdowns impacting negatively on global economic activity
Expansion of Money Supply
Both the FED and ECB continue to issue monetary stimulus packages in response to the Covid 19 pandemic which has seen the fiat money supply increase significantly. Interest rates however, are not being allowed to rise to compensate savers for the loss of purchasing power of fiat currency. Anemic global economic growth, most notably as a result of Covid 19 interventions, adds additional challenges to investment decision making.
Low / Negative Interest Rates Covid 19 related pressure on economic activity
MACRO THEMES OF SIGNIFICANCE
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Cryptocurrency
Growth of M2 Money Supply over Time
The growth of the M2 Money stock continues to grow unabated and has expanded significantly between Q1 and Q4 2020. This highlights one of the primary sources of rising liquidity in the financial system.
Percentage Increase / Decrease of Total M2 Money Supply each Year
Increase of 24.35% in Q4 2020
The M2 Money Stock increase by 24.35% from Q4 2019 to Q4 2020. In other words, almost 25% of the total USD money supply was created in a period of 12 months. This magnitude of increase is far higher than any other period on record.
MONETARY STIMULUS
Macroeconomic Backdrop to The Great Reset
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The increase in the money supply has not yet seen a significant uptick in reported Consumer Price Index (CPI) which is an indication of consumer inflation. Whilst there is a potential argument that in reality inflation experienced by consumers is greater than reported figures, the global economy is not in a high or hyper inflation environment broadly speaking. This would suggest that the primary area impacted by monetary stimulus is not consumer demand.
The expansion of the money supply has significantly outpaced economic growth since 2008 indicating that the additional liquidity in the system hasn’t reflected an increase in economic output of the same magnitude. i.e. an additional $1 in the system creates less than $1 additional economic output. As this relationship continues to diverge further, over time a greater relative amount of monetary stimulus is required to achieve a given unit of additional economic output.
WHERE IS THE MONEY FLOWING?Monetary stimulus can flow to the following areas:
1. Productive economic activity Result: Economic growth without inflation (Real GDP rises)
2. Consumption Result: Inflation without growth (CPI rises)
Macroeconomic Backdrop to The Great Reset
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The Buffett Indicator is the ratio of total United States stock market valuation to GDP. The Buffet indicator is currently at historical, all-time highs indicating that the equity market is overvalued relative to the quantum of economic output. Current levels surpass that of the 2000 Dot-com bubble which was widely recognized as a period of extreme and unsustainable market valuations.
The P/E ratio is a classic measure of any security's value, in this case applied to the S&P 500 which is a measurement of an assets earnings relative to its price. It also indicates how many years of profits (at the current rate) it takes to recoup an investment in the equity. Only during the height of the Dot-com bubble have P/E ratios been recorded at higher levels in recent history than today.
3. Financial assetsResult: Asset inflation, bubbles and banking crises (Asset prices rise)
Macroeconomic Backdrop to The Great ResetWHERE IS THE MONEY FLOWING?
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Periods of credit creation and contraction is a major driver of the business cycle. It would appear that this current period of asset price appreciation is being artificially extended by accommodative central bank monetary policy rather than increased productivity and organic growth of the underlying economy.
Recent history shows that periods of relatively low interest rates precede asset price bubbles. 2009 to 2016 was a prolonged period where the Effective Federal Funds Rate was pegged near zero percent. The rate rose during 2016 to 2020 peaking at approximately 2.5% in an attempt to “normalize” interest rates, but the FED has since lowered to rate to near zero again after the Covid-19 market sell-off.
Interest rates represent the cost of borrowing money. Low interest rates encourage lending and credit creation. The illustrations below demonstrate that periods of relatively low interest rates have preceded equity market bubbles in the past.
CORRELATION OF LOW INTEREST RATES AND EQUITY MARKET BUBBLES
Effective Federal Funds Rate S&P 500 - Bubbles and Busts
Macroeconomic Backdrop to The Great Reset
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The greatest impact of newly created money in the financial system is not in economic output (GDP) or inflation (CPI), but rather the effect on asset prices. Excess liquidity and low interest rates are fueling flows into equity, debt and property markets assets which we assess to be the primary driving asset price inflation.
Macroeconomic Backdrop to The Great ResetIS THIS TIME DIFFERENT?
In our view, a financial, economic and monetary crisis is inevitable given the disconnect between asset prices and free market forces. This time may well be different to financial crises in recent history as it has the potential to be much greater in magnitude. The extremes to which this market cycle has been extended in terms length of time, the extent of central bank intervention, the quantum of global debt and associated systemic risk and the unabated proliferation of the fiat money supply are all factors which may accentuate the magnitude of a financial crisis.
Further to this we expect that such a crisis will provide the ideal catalyst and backdrop to The Great Reset and associated agendas.
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Whilst we conclude that the current trajectory of the financially system is unsustainable and will likely result in a financial crisis in some for, it a great deal more challenging to predict when a financial crisis will occur and exactly what it may entail. We can however categorize a financial crisis event into two types of outcome, namely a deflationary outcome and inflationary outcome. A deflationary outcome sees a mass exodus of value from financial assets triggered by a catalytic event that stirs up panic and fear in financial markets. A flight to safety ensues, which is typically a move to cash and safe haven assets. An inflationary outcome sees a loss in confidence of fiat currency and subsequent loss of value to that currency as prices of assets as well as goods and services rise in nominal terms. In this scenario, store of value assets such as gold and other precious metals are expected to perform well. A financial crisis wouldn’t necessarily result exclusively in a binary outcome and there may be periods of inflation or deflation as the event unfolds, it does provide an indication for which assets one should ideally hold exposure to.
Macroeconomic Backdrop to The Great Reset
Deflationary Outcome Inflationary Outcome
Hard Currency Precious Metals
Bonds Real Assets
Digital Assets Digital Assets
Best performing assets given inflationary or deflationary outcome:
DEFLATIONARY VS INFLATIONARY OUTCOME
We view Bitcoin in particular as well as other digital assets as having properties of both a store of value asset and a safe haven asset. We therefore expect Bitcoin and digital assets to perform well in either an inflationary or deflationary financial event.
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Investment AnalysisDIGITAL ASSET INVESTMENT UNIVERSE (1 APRIL 2021)
Market Cap:
$2,1 Trillion
24hr Vol:
$242 Billion
Facts and
FiguresBitcoin Size:
51%
Bitcoin Age:
13 Years
https://coinmarketcap.com/
Facts and
Figures
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There are different ways to categorize various digital assets. For the purposes of our investment process, we have divided digital assets into five broad categories as denoted above namely - store of value, platform, payment, utility, asset-backed.
Investment Analysis
The digital asset universe consists of thousands of cryptocurrencies and digital tokens. Whilst there is huge investment potential in this space given the technological innovation that blockchain has to offer, the majority of digital assets in our view are not investment worthy. Similar to the technology industry of the late 1980’s with the adoption of the internet in its infancy, much of the technological development in the digital asset industry still has a long way to go before it can offer real world value. The industry is largely unregulated and the reality is that many projects will fail. Similar to the tech giants of today however, we expect some projects to succeed in delivering innovative and disruptive blockchain based solutions to the marketplace. Such projects have the potential to deliver exceptional returns on investment and herein lies the challenge to identify these opportunities.
DIGITAL ASSET SELECTION
Thousands of Digital Assets Digital Asset Categories
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The estimated leverage ratio is an relative indicator of the amount of leverage across futures, options and other derivative instruments. There are a number of use cases for this metric and is specifically applicable as an early warning signal for potential increase volatility when leverage is at high levels.
Stock-to-flow ratios are used to evaluate the current stock of an asset (total amount currently available) against the flow of new supply (amount mined that specific year). This is one possible indicator of whether Bitcoin is over or undervalued.
Given the hype around cryptocurrency as an asset class, filtering through information and seeing through the noise is a major challenge for investment in the space. We have created an investment framework which applies quantitative data analysis techniques to generate and verify investment ideas in an objective and standardised manner.
Investment AnalysisQUANTITATIVE ANALYSIS
* Illustrations provided by CryptoQuant
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Investment Analysis
Cryptocurrency is the first asset class where investor activity can be extracted from massive data sets through each digital asset’s public ledger, which captures every on-chain transaction in history.
Since blockchains offer vast amounts of open, incorruptible financial data it provides the opportunity to monitor and measure the economic activity in these networks. Through the collection and study of this data it is possible to monitor sentiment and investor behaviour through this activity.
On-chain analysis is a quantitative investment approach driven by fundamentals which supplements other other forms of investment analysis conducted in the investment process. This type of analysis can be focused exclusively on one digital asset by looking at historical trends or can be used to compare different digital assets to identify whether it is relatively under or overvalued.
ON-CHAIN ANALYSIS
Significant growth in the number of active addresses supported bullish price action for Chainlink (LINK).
Binance Coin’s address activity increased significantly in weeks prior to breaking $600 for the first time.
* Illustrations provided by Santiment
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Investment Analysis
Our quantitative analysis includes monitoring of the onchain movements of cryptocurrencies related to notable stakeholders including exchanges and miners. Cryptocurrency flows and relevant correlations to price can provide early indication of potential price movements.
Correlation has been identified between funds flowing into and out of exchanges and BTC price. BTC deposits are bearish, whilst BTC withdrawals are bullish.
The selling activity of BTC miners is a major factor influencing supply. Increased transfers out of miner’s wallets to exchanges is generally a bearish signal.
ON-CHAIN ANALYSIS
* Illustrations provided by CryptoQuant
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Github is a public code repository which most digital asset projects use to control and manage software development operations.
As this information is freely available and the code is open source, it allows for inspection of the code and further analysis of the development activities of digital asset projects.
Github analysis can be used to identify the following:● Identity of the developers on the project and how many there are● The number of software code commits over specified periods of time● Linking specific developers to the code commits● Determining how concentrated the code commits are to specific developers
Investment AnalysisGITHUB ANALYSIS
GitHub analysis dashboard
Crypto commits in the past 12 months (last updated: 4/13/2021, 12:06:08 PM)
Number of GitHub commits by crypto projects
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Investment AnalysisBITCOIN MARKET CYCLE ANALYSIS
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StrategyThe portfolio will allocate to asset classes which are deemed likely to retain or grow in value during a reset event.
● In our view cryptocurrency is currently the most attractive asset class in this respect. ● Commodities, real assets and other alternative asset classes will be introduced in time in to the portfolio.
TacticsThe portfolio will be directed by an actively managed investment strategy driven by fundamental and quantitative analysis. The strategy will seek to generate alpha in the cryptocurrency market through:
● Allocation to Alt Coins during market uptrends.● Allocation to cash and / or stablecoins during market downtrends.● Algorithmic arbitrage execution across multiple exchanges.
Asset ProtectionThe safe protection and custody of assets is a top priority.
● Safe holding of digital assets on bluechip exchanges and / or custody providers.● Access to deep liquidity in times of market stress.● Use of proprietary software to assist with the secure movement and transfers of assets in the portfolio.
Investment SolutionOVERVIEW
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In normal market conditions the portfolio will hold a core position in Bitcoin (BTC), a secondary position in Ethereum (ETH) and minor positions in Alt Coins, cash & stablecoins.
Extensive data analysis enables identification of investment opportunities and trading signals for the purpose of generating alpha which can be applied to the portfolio allocation. Investment ideas either originate from observations of the data indicators or from qualitative analysis that is then supported by quantifiable evidence provided by the data analysis.
Minor allocations to specific Alt Coins is a key driver of alpha in the portfolio. Alt Coins are typically higher Beta assets than Bitcoin and have the potential to outperform specifically when the overall market is bullish and Bitcoin is trending.
Whilst the mandate allows full flexibility, the target maximum exposure to a single crypto asset would be guided by the market cap.
Maximum exposure to a single digital asset:● Bitcoin - 100%● Ethereum - 50%● Top 10 (Excluding BTC, ETH) - 35%● Top 50 (Excluding BTC, ETH) - 10%● Outside Top 50 - 5%● Cash and Stablecoins - 100%
Example of holdings in normal market conditions
Investment holdings displayed are for illustrative purposes only and are not the actual holdings of the portfolio.
Investment SolutionPORTFOLIO CONSTRUCTION
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Example of aggressive, moderate and conservatively positioned portfolio given the associated market conditions:
● More aggressive positioning - Greater allocation to Altcoins, underweighting cash and stablecoins● More conservative positioning – Lower allocation to Altcoins, overweighting cash and stablecoins
Aggressive
Moderate Conservative
The portfolio will actively increase exposure to digital assets when risk / reward metics support a future rise in price. Conversely the portfolio will reduce digital asset exposure when its indicators turn negative, suggesting a future fall in price. It is important to identify when sentiment is reversing and to increase or mitigate exposure accordingly.
According to our backtests, a greater portion of the strategy alpha has been shown to be derived through tactical risk reduction to avoid losses during market downturns rather than increased allocations to higher beta Alt Coins during market uptrends. While for a long term holder of individual digital assets or a digital asset index, market cycles tend to cancel out over time, tactical allocation to increase and decrease exposure at the appropriate time can greatly improve returns.
While past performance is never a guarantee of future results, we believe the results of our backtests are supportive of our process.
Investment holdings displayed are for illustrative purposes only and are not the actual holdings of the portfolio.
Investment SolutionPORTFOLIO CONSTRUCTION
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Investment SolutionACTIVE ASSET MANAGEMENT
Given the current market conditions, it is our view that digital assets offer a greater asymmetric return than other asset classes. In a low growth, low interest rate environment globally where traditional investments are trading at historically high valuations by many measures, an allocation to digital assets is warranted in our view. Bitcoin for example has already delivered exceptional returns recently having risen over 1000% in value since the lowest point in March 2020. This growth hasn’t come without significant volatility as Bitcoin and other digital assets in general remain susceptible to significant drawdowns in capital value.
BTCUSD performance since March 2020 Covid lows
Recent BTCUSD drawdowns: -31% in 15 day; -25% in 8 days; -14% in 3 days
Due to the volatile and cyclical nature of Bitcoin and digital assets in general, we employ an an active asset management investment strategy which seeks to take up more defensive positions during periods of market weakness with the aim of reducing volatility and limiting the effect of drawdowns.. This is achieved by allocating a greater percentage of exposure to cash and stablecoins when indicators are negative and suggest that a fall in price is likely. Whilst this risk mitigation strategy will certainly not eliminate all market risk, we aim to deliver a returns with lower volatility and reduced drawdowns over time than an investor would experience by holding Bitcoin directly or a passive digital asset index for example.
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In addition to active asset selection and quantitative trading indicators, algorithmic arbitrage trading an additional alpha driver. A number of arbitrage strategies have been deployed to identify price inefficiencies and execute profitable arbitrage trades.
These strategies range from conceptually simple two trade arbitrage strategies to complex strategies using a combination of trading methods (market and limit orders) and multiple trades (possibly 5+ trades to realise a profit). The Arrel Tech software utilises proprietary algorithms alongside heuristic AI algorithms to search for and identify arbitrage trading opportunities.
Investment Solution
Example of an arbitrage transaction
Visual depiction of orderbook inefficiencies and associated profitability
ALGORITHMIC ARBITRAGE TRADING
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Investment Solution
This investment strategy has been tested in a live account with an inception date of 1 January 2020. $100,000 invested at inception returned a current to a value of $587,963.00 as of 25 June 2021 (488% return). $100,000 invested into Bitcoin over the same period would have returned an amount of $471,574.14 (372% return).
PILOT PORTFOLIO PERFORMANCE
NotePast performance is not an indication of future returns. This is a high risk investment and there is no guarantee that this investment will make profits; losses may be made.
Management Fee 2% per annum
Administrator Fee 0.45% per annum
Performance Fee 20% above a hurdle
Hurdle Rate10.03% annualized (0.8% monthly)
Portfolio - Blue Line BTCUSD - Red Line
Bilal AdamChief Executive Officer
Pete Featonby-SmithChairman
Glen Anthony StewardDirector
Bradley KritzingerInvestment Manager
Bilal Adam is a technopreneur as Chairman of Arrel Technology Ltd, a blockchain fintech business. Bilal leads innovative fintech empowered investment as CEO of Stewards Investment Capital of behalf of institutional and HNWI clients. His previous experience encompasses valuable knowledge gained as a Chartered accountant with experience at Deloitte and Investec before being offered the role of CEO by Afrasia Capital Management. Bilal was nominated as the President of the South African Chamber of Commerce in Mauritius in 2020 after contributing to the board for many preceding years.
Peter has been both a private and professional investor for over 25 years. He is a key individual and sits on the board of two Asset Management companies registered by the Financial Services Board of South Africa. He sits on the board of a Fund Manager and a Collective Investment Fund company regulated by the FSC of Mauritius and is an integral member of the Investment Committee. Over the years his investment bias has been towards the property sector and has gained considerable experience and expertise in both listed and private equity property investments. He also sits on the board of several private property companies involved in the commercial, residential, retail and hospitality sectors.
Bradley has been with the Stewards International Group for more than 17 years. He was previously employed as Broker at NBS Bank and Capital Market Administrator at BoE Bank Limited. Bradley has a high level of ethics and integrity and is best described for his in-depth analytical skills and ability to decipher in complex situations. Bradley plays an active part in the Investment Committee of an Investment Adviser (Unrestricted) Licensee of the Financial Services Commission, Mauritius (FSC), a Fund Manager regulated by the FSC and a Collective Investment Fund company also regulated by the FSC.
Glen has 17 years’ experience as a fund and securities portfolio manager. He is a key individual and sits on the board of two Asset management companies registered by the Financial Services Board of South Africa. Prior to the establishment of Stewards International Funds PCC in the year 2000 he was based in London for a period of 5 years and worked for two investment banks namely Merryl Lynch and DMG Deutsche Morgan Grenfell.
Investment Committee
Graeme TennantInvestment Manager
Nicholas AllenChief Executive Officer
Jevon Coffin-GreyChief Technology Officer
Graeme is a financial analyst and portfolio manager who incorporates the worlds of traditional finance and digital assets in his work and the investments he manages. In spending over a decade in investment management and financial advisory roles, he has a deep understanding of traditional financial markets and is now a highly regarded portfolio manager and technical analyst with a focus on digital assets and financial derivative instruments. He holds a Chartered Alternative Investment Analyst (CAIA) designation, a Bachelor of Commerce in Economics degree from UNISA and a Postgraduate Diploma in Financial Planning from the University of the Free State.
Nick’s vision and experience in the blockchain and crypto asset realm is bolstered by his vast career in the electronic research and manufacturing industry. During his tenure as an 11-year industry specialist, he has served in a variety of roles focused on product design, development, and research – during which he led teams of engineers, draftsman, technicians, and developers. Now leading Arrel Technology, a fintech company focused on Digital Asset Research and Development.
Having led teams involved in developing innovative commercial products for heavily data-dependent environments, Jevon is very active in the cryptocurrency and blockchain space. With a specialisation in electronic engineering and over 10 years of experience in hardware and software development, Jevon has applied these skills into the blockchain environment by consulting on projects aimed at integrating IoT with the blockchain.
Investment Committee
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Company SummaryStewards Investment Capital forms part of the Stewards affiliation of financial services companies established two decades ago. Stewards Investment Capital provides investment management services to high net worth individuals and institutional investors across multiple asset classes. Stewards Investment Capital also acts as a maker maker and liquidity provider in niche markets. We hold a Global Business Company Category License, as well as an investment Advisor (Unrestricted).
We are committed to driving and nurturing successful investment portfolios. These are invested predominately in listed equity and other securities, including warrants, convertible securities and other derivatives. Stewards is a pioneer in the digital asset sector and is a leader in providing investment solutions to access this new emerging asset class.
Investment ManagerSTEWARDS INVESTMENT CAPITAL
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Company SummaryArrel Technology develops proprietary asset management software for digital assets and is the technology partner of Stewards Investment Capital for the Great Reset Portfolio. Arrel Technology is a provider of institutional grade investment software with a mission to develop solutions which bridge the gap between the financial markets of today and the decentralised markets of the future.
Arrel technology offers solutions for digital assets in the areas of:
● Portfolio management● Treasury management● Brokerage● Liquidity provision● Algorithmic trading● Remittance● Collateralized lending
Investment PartnersARREL TECHNOLOGY
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Investment Custodian
Company SummaryInternational Assurance Limited (IAL) is a licensed long-term insurance business and protected cell company in Mauritius and is the custodian for the Stewards Investment Capital Great Reset Portfolio. IAL provides investment, savings, individual life insurance, group life insurance and retirement funding solutions in Africa, the Middle East, Europe, the Americas and Asia.
IAL aims to create a better financial future for our clients by offering an extensive, market leading range of products and services to help them build and protect their wealth and lifestyles. The Company will continue to be guided by its strong values: Respect, Integrity and Accountability
Portfolio BondThe portfolio bond is the chosen investment structure within the which the investment strategy will operate. A portfolio bond is an open-ended lump sum investment product domiciled in Mauritius for the purpose of long term investment. It is classified as a life assurance policy and on death is valued at 101% of the bonds market value.
INTERNATIONAL ASSURANCE LIMITED
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Get In TouchCONTACT DETAILS
Enquires & Support:
Investment Manager
Stewards Investment Capital
FSC: C116016616
https://stewardsinvcap.com/
Nexteracom Tower 1
Cybercity, Ebene
Mauritius
Auditors
Ernst & Young
Tel: (+230) 466-7533
https://www.ey.com/
Nexteracom Tower 1
Cybercity, Ebene
Mauritius
Applications & Documentation:
Investment Administrator
International Assurance Limited
FSC: C108007133
https://www.international-assurance.com/
Suite C 208, La Croisette
Chemin Vingt Pieds, Grand Baie
Mauritius
Compliance Officer
Antish Oodhorah
Stewards International
Tel: (+230) 466-7533
Email: [email protected]