April 2023 Newsletter
April is a mile marker for the Kirkland Capital Group and none of this would have been possible without the support of our Investor Family. Thank you!
The fund has been active for three years, and even with over 100% growth per year, performance has been consistent. The fund has also reached $20 million in assets under management (AUM). For the three years of operation the fund has maintained low correlation to traditional markets despite the roller coaster ride of global pandemic, inflation, rising interest rates, and bank failures. Private market instruments are generally lower volatility than traditional investments which are subject to the randomness caused by investors emotional decisions. Even with this general lower volatility, Kirkland Income Fund returns have been very consistent with an annualized standard deviation of returns since inception of 0.47% (for reference, the Bloomberg Aggregate Bond Index has an annualized standard deviation of 6.22% for the same period). Brock and I as managers and investors in the fund are very pleased with these achievements and look forward to many more great years to come!
As part of our commitment to transparency and providing information to our investors, we're proud to now offer KIF’s detailed data on eVestment. eVestment is a platform that provides investment data, analytics, and research to help investment professionals make informed decisions. It offers a range of solutions such as manager research, due diligence, and monitoring tools for hedge funds, private equity, real estate, and other alternative investment strategies. eVestment is widely used by asset managers, institutional investors, consultants, and other financial professionals around the world. You can get a breakdown of KIF quarterly performance on eVestment today!
Risk Adjusted Return Profile of Private Debt
You have likely heard me preaching about the great risk adjusted returns that can be captured in private debt. Well, don’t just take my word for it. There is a recent report sent out by Goldman that states family offices are now allocating heavily to private debt as they are recognizing what you have known for months, if not years. Congrats, you are ahead of the big money! This opportunity is far from over so look over those portfolio allocations with your financial advisor and determine if you have proper allocation to the private debt investment space.
The Goldman Sachs paper can be found here.
Here's the asset allocation of the family offices mentioned in the report where you see that a significant portion of their portfolio is now in alternative investments.
There is also a recent short CNBC clip discussing this as well on Squawk Box.
Further note from last month’s newsletter. We saw the Fed raise another 25 bps as we expected. We are looking at strong labor markets regardless of tech layoffs. Inflation is down (5.6% Core) but digging in its feet which will continue to create head winds. This will put further pressure on equity investments. Remember chaos and hardship does create investment opportunity, but I still believe in approaching with caution. Will we move forward into a recession? Can’t be sure but most importantly investors need to partner with managers that maintain a disciplined approach to their portfolio and are not chasing yield through higher leverage or looser covenant structures. This market has already shaken out some managers that were not prepared or experienced enough to adjust with these dynamic events. I am sure there will be more.
