We conceived Tenac Asset Management at the end of 2019. Looking back on more than three and a half years managing the investment strategy focused on macro and emerging markets, we are pleased with what has been achieved so far.
During these years we navigated various challenges, from the Covid pandemic and the Russia- Ukraine war to the onset of the inflationary period in 2021 and its repercussions on fixed-income assets throughout 2022. Notably, we weathered the major storm of 2022, a year marked by the highest capital outflows from emerging markets fixed-income space on record. Tenacity and resiliency are the words that better describe our character undergoing challenging times.
The team has undergone a significant consolidation. Collectively, our team boasts an unparalleled combination of market expertise and policy experience in the emerging markets landscape, hard to find in another team investing in this space. And this is one of the essences of Tenac’s strength.
Emerging markets
Emerging markets encompass a highly diverse set of realities, which over time has led to a wide range of investment outcomes. Our distinctive approach lies in identifying opportunities with an asymmetric distribution of potential returns – where potential gains significantly outweigh potential losses- and building a portfolio around them.
We believe emerging markets offer attractive opportunities for those investors who are patient, but nimble and bold when occasions arise. Our absolute return-oriented mandate and our flexibility to seek the most attractive opportunities sometimes “off the beaten path” is an advantage that larger and index funds can’t afford.
Investment Philosophy
The Fund invests in emerging markets marketable securities, including sovereign, quasi-sovereign, and corporate credit, local rates, and currencies. A substantial majority, however, of the Fund’s performance, risk, and exposure comes from its credit investments.
Our analysis combines a global macro or so-called top-down approach to determine the Fund’s desired risk exposure level (whether is via credit, duration, idiosyncratic, etc.). This layer takes advantage of our team’s insights and involves a thorough analysis of policy decisions of Central Banks in developed countries, coupled with a comprehensive assessment of growth trajectories, and capital flows. Additionally, a fundamental or bottom-up analysis is pursued to estimate a “fair value” range for a given security.
Our strategy is to maintain a well-diversified portfolio of investments in which favorable outcomes occur more frequently than adverse ones. And the impact of those adverse outcomes on the Fund’s capital is within our risk limits. The outcome is a portfolio typically comprising around 40 positions.
A regular and systematic portfolio review allows us to reassess our views. Fund positions get replaced when they achieve their price target, when the fundamentals no longer align with our underwriting thesis, or when superior alternatives emerge with higher risk-adjusted returns and better use of capital. This repetitive cycle is not just a strategy; it is the core of our investment philosophy. We are humble to always consider room for “unknown unknowns”. Our process is adaptive to new information and designed to consistently deliver results and to navigate the complexities of the market landscape.
Investment Philosophy
The Fund invests in emerging markets marketable securities, including sovereign, quasi-sovereign, and corporate credit, local rates, and currencies. A substantial majority, however, of the Fund’s performance, risk, and exposure comes from its credit investments.
Our analysis combines a global macro or so-called top-down approach to determine the Fund’s desired risk exposure level (whether is via credit, duration, idiosyncratic, etc.). This layer takes advantage of our team’s insights and involves a thorough analysis of policy decisions of Central Banks in developed countries, coupled with a comprehensive assessment of growth trajectories, and capital flows. Additionally, a fundamental or bottom-up analysis is pursued to estimate a “fair value” range for a given security.
Our strategy is to maintain a well-diversified portfolio of investments in which favorable outcomes occur more frequently than adverse ones. And the impact of those adverse outcomes on the Fund’s capital is within our risk limits. The outcome is a portfolio typically comprising around 40 positions.
A regular and systematic portfolio review allows us to reassess our views. Fund positions get replaced when they achieve their price target, when the fundamentals no longer align with our underwriting thesis, or when superior alternatives emerge with higher risk-adjusted returns and better use of capital. This repetitive cycle is not just a strategy; it is the core of our investment philosophy. We are humble to always consider room for “unknown unknowns”. Our process is adaptive to new information and designed to consistently deliver results and to navigate the complexities of the market landscape.
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Factsheet
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Annual Letter 2023
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Annual Letter 2022
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Awards
Awards
DISCLAIMER
This presentation is not an offer to sell or a solicitation of an offer to buy securities of any Tenac fund (“Fund”) or any other fund. Solicitations of offers to buy interests in a Fund will be made only pursuant to the Fund’s Offering Memorandum, which contains a complete description of the Fund and the risks inherent in an investment in the Fund and which qualifies this presentation in its entirety. An investment in a Fund involves a high degree of risk and is suitable only for sophisticated and qualified investors, and investors should be prepared to suffer losses of their entire investments. No assurances can be given that any Fund’s investment objectives will be achieved, and investment results may vary substantially on a quarterly or annual basis. In addition, depending on conditions and trends in securities markets and the economy generally, Tenac Asset Management, LLC (“TAM”), as TGF’s General Partner, may pursue any objectives, employ any techniques or purchase any type of instrument that it considers appropriate and in the best interest of that Fund.
This document has been prepared for the information of investors and prospective investors in the Fund and is not intended to be distributed to the general public. Past performance does not guarantee future results.
General: The performance data in this presentation are intended to show the performance of Tenac’s long only track record over the periods indicated. Performance figures include the reinvestment of interest, dividends and other earnings; the deduction of transaction costs and all other fees and expenses, including a 1.25% management fee and the deduction of performance allocation in excess of benchmark (the highest rate to which any TAM clients are subject) in case it should apply. However, the performance results do not reflect the deduction of any resulting tax liabilities.
Performance Data Limitations: The actual performance experienced by any individual investor may differ from the performance shown as a result of the investor’s being subject to an alternative fee structure and various factors such as the timing of the investor’s contribution to or withdrawal from the relevant Fund and the investor’s high-water mark. The performance results reflect investments for a limited period of time and therefore do not reflect performance in all different economic or market cycles.
While the performance was generated with investment philosophies and methodologies that TAM believes will be similar to those it will use in the Fund’s ongoing investment activities, future investments will be made under different economic and market conditions and in different securities. The performance data have not been compiled, reviewed or audited by an independent accountant, and data for recent periods may be adjusted as a result of a subsequent audit for the year of which those periods are a part. It should not be assumed that investors will in the future experience returns, if any, comparable to those presented in this presentation.
Index Data: The EMBI Global Diversified (“EMBIGD”) is a broad-based unmanaged index of bonds that is intended to be representative of Emerging Markets sovereign and quasi sovereign fixed income market in general. The EMBI Global Diversified Investment Grade and High Yield (“EMBIGD IG” and “EMBIGD HY”) represent the components of the EMBIGD that are high grade and high yield respectively. Performance data for EMBIGD, EMBIGD IG and EMBIGD HY reflect reinvestment of income but do not reflect the deduction of any transaction or management fees or costs. The presentation of index data does not reflect a belief by TAM that the index is an alternative to any Tenac Fund or comparable in any way to any Tenac Fund.
Those data are included only to provide some indication of the performance of U.S. and global securities markets generally during the periods for which the TGF’s performance data is presented. The indices are unmanaged and diversified (across companies, industries and sectors), while TAM may concentrate TGF’s respective investments in a relatively few industries, or sectors and may invest in corporate or sovereign bonds with smaller or larger market capitalizations and trade actively.