FUTURE
The magazine of Superfund, Issue May 2009
The Future of investing
Bright
Future
© Dewayne Flowers | Dreamstime.com
Navigate the
­financial storm
with Superfund
and gold.
Superfund at the EU
Returns in Crisis
Richard Shelby
Superfund is part of the “Expert Group on
Financial Education” of the EU. One of the
group’s goals is to make young people more
familiar with business topics.
For a long time, it was widely believed that
profits can only be achieved with high risk.
The recent economic crisis proves this
theory no longer holds true.
No light at the end of the tunnel: US Senator
Richard Shelby talks to Superfund about the
consequences of the economic crisis.
2∫ FUTURE | Contents
FUTURE in
60 seconds
4
10
High Returns in Times of Crisis
Superfund Gold
For a long time, alternative investments have been
overshadowed by traditional asset classes, especially
stocks. Today, the financial crisis has shocked both
experts and ordinary people into action, and worldwide
efforts are underway to find new approaches that can
prevent similar plunges in the global economy, as well as
in investments. Learn more about why managed futures
funds should play a key role in a secure portfolio.
The two go hand in hand with success as the
Superfund trading strategy combines with
gold for added security. In times of crisis
such as these, gold proves its value as a safe
haven with the added benefit of profit
potential. While stocks plunge, the price of
gold continues to climb. Superfund investors
can be satisfied with their returns.
Page 4
Page 10
Contents
18
26
30
Harry Markowitz
Meets Christian
Baha
One-Mile Report:
Tokyo
Superfund News
worldwide
The Superfund One Mile
location report moves to
Asia. Welcome to Tokyo! This
buzzing financial and business
metropolis also hosts some
fine culinary attractions. We
reveal some of the best sushi
restaurants located in a onemile radius of Superfund’s Japan
office. Join us on a discovery
tour of the famous Tokyo fish
market, which boasts more
than 400 different types of fish.
Ingrid Betancourt was elected
Woman of the Year 2008 and
presented with an award by
former Federal Chancellor of
Austria, Alfred Gusenbauer. As
a partner of the event,
Superfund was proud to attend
the ceremony at the Palais
Coburg. We also unveil new
Superfund offices and report
on an exclusive event in Zurich
with special guest, champion
skier Bode Miller.
Nobel Prize winner Professor
Harry Markowitz, who has
been in contact with Superfund
for many years, and Christian
Baha came together in a
San Diego TV studio. They
discussed managed futures
funds and the advantages of
the Superfund trading strategy
which is based on Markowitz’s
groundbreaking 1952 Modern
Portfolio Theory.
Page 18
Page 26
Page 30
Christian Baha
Founder and owner
of Superfund
22
Interview: Senator Richard Shelby
My opinion is not that important
US Senator Richard Shelby has yet to see any light at the end of the
tunnel when it comes to the global economic crisis, and fears that
hard times are yet to come for the economy. The 74-year-old spoke to
Superfund, though not about the crisis but rather about his own
mistakes and on the long winding road back to normality. In the past
few months, the Senator, who has long-since switched from the
Democrats to the Republicans, has had a lot on his plate with the
ailing US auto industry.
Recently, I have been asked more and more by the media
and investors to speculate when the market will finally recover.
And also if this current economic crisis can be compared to
that of 1929. All of us are, of course, anxious about what the
future will bring. But we also cannot predict what is around
the corner.
Consider for example that in December 2007, the DAX was
around 8,000 points. At the time, most analysts expected
stock markets in Germany to rally. Optimistic estimates were
Page 22
even pitched between 8,400 and 10,250 points by the end
of 2008. The DAX eventually ended up at 4,800 points. The
conclusion? That my personal opinion, or that of other fund
managers, is not that important, and neither is that . Because
we all work with one basic trading technique: The trend
following strategy.
The aim is not to predict something, but, like a surfer, to find
the right wave and ride until the end. By using a systematic
In the
Limelight
32
34
Superfund at the
heart of Europe
Producing an advertising
spot involves a great deal
of action. Three advertising
spots multiply the fun. The
advertising spots discussed
in the last issue of FUTURE
have been followed up by
two additional sequences,
creating a series with an
integrated story line. We
invite you “on set” behind
the scenes of the current TV
campaign in the USA.
Superfund has been awarded
one of the 25 official seats on an
EU Committee. The Expert
Group on Financial Education
has invited Superfund to help
find ways to improve financial
education for European citizens.
The main focus area for the
Committee is the next
generation, with the aim of
involving young people more in
economic matters. Superfund
is represented in Brussels by
Markus Weigl.
Page 32
Page 34
computer program, human emotions are taken out of the
equation. This minimizes risks and avoids human error.
Over the long term, managed futures will always be a better
investment than stocks. And if you invest for the long term,
there are two things you need in any case:
First, attractive returns and second, strict risk control. This is
exactly what investors receive from managed futures. And you
can take a great deal of comfort from the fact that managed
futures are only traded on tightly regulated stock exchanges.
Systematic trading in managed futures will work as long as
humans have the herd mentality. Therefore, my suggestion
is: invest in broadly diversified systematic trendfollowing
strategies. This way, you can also make money when stocks
are going down.
4∫ FUTURE | High returns in times of crisis
Times of Crisis
Regardless of which timeframe is used for comparison, the Superfund trading
strategy clearly outperforms equity, commodity, and most hedge fund strategies.
This is demonstrated, for example, by the development in 2008 when Superfund
funds outperformed the MSCI World Equity Index by more than 70 percentage
points. Another plus: With a correlation coefficient of close to zero, the performance
of Superfund funds is completely independent of other asset categories.
High returns in times of crisis | FUTURE ∫5
High
Returns
in times of crisis
F
or a long time, it has been widely
believed that investments yield
high returns only as a result of higher
risk. Recent events have proven exactly
the opposite. From its inception until
year-end 2008, the Superfund Q-AG1)
returned +776% without coming
anywhere near the typical risk
parameters of equities.
“Change” is the motto of the new US
president. In the investment world too, new
cards are on the table – with one immediate
consequence: The age-old mantra that high
returns can only be achieved by taking on
higher risk is in serious question. The long
series of slumps in the equity markets of both
developed economies and emerging markets
is ample proof that the risk of incurring large
losses was heavily miscalculated or simply
ignored for a long time. For a number of years,
Superfund founder and owner, Christian Baha,
has been voicing his concerns about this gross
underestimation of risk: “There is always the
Performance
Superfund Q-AG (closed fund)
Credit Suisse Managed-Futures Index
CISDM Equity Long/Short Index
Credit Suisse/Tremont Hedge Funds Index
Standard & Poor‘s 500
MSCI World
12 months (2008)
01/08 – 12/08
+35.4 %
+18.3 %
–14.4 %
–19.1 %
–38.5 %
–42.1 %
10 years
01/99 – 12/08
+398.0 %
+96.7 %
+104.9 %
+96.2 %
–26.5 %
–20.0 %
Source: TeleTrader
1) Superfund Q-AG (closed fund), source: TeleTrader.
Period: 03/1996 to 12/2008. Past performance is not
indicative of future results.
6∫ FUTURE | High returns in times of crisis
threat of risk in investing and
markets is not a new one, of
none more so than when an
course.
investment bubble is building
up. This is typical of equities,
Between 1956 and 2008,
as investors only bet on rising
the 500 largest US dividendmarkets. In contrast to this,
bearing instruments of the
investment vehicles that
Standard & Poor’s 500 Index,
spread their funds widely
suffered a total of 10 bear
are able to bet
markets. A bear
In a direct
on falling as
market is defined
comparison,
well as rising
as an extended
equities clearly
markets, and if
period of time
achieve lower
they pursue a
during
which
performance
clear investment
equity
prices
than managed
strategy, such as
drop by at least
futures funds.
the Superfund
20%. This was
trading strategy,
exactly the same
they are also much better
figure by which the index fell
positioned.” The phenomenon
in the bear market of the year
of high losses in equity
1990. In the equity market
crises of 1973 to 1974 and
2000 to 2002, further value
was knocked off these
markets, which plunged
–45% and –46%, respectively.
This was only a little more
than the –40% that the US
equity index lost in the course
of one year.
100 roads lead
to the goal
In a direct comparison,
equities clearly achieve lower
performance than managed
futures funds. Futures funds,
such as Superfund funds,
boast a number of advantages.
Equity markets rise and fall
with investor confidence.
As long as euphoria rules,
equities rise, culminating in
bull markets.
When investors sober
up, however, they start to
scramble for the exit and sell
their stocks; the consequence
is a bear market. The
Superfund trading strategy,
by contrast, is not driven by
greed or fear. Instead, it takes
full advantage of a wide range
of modern investment options
which can profit from rising
or falling prices in a broadly
diversified spread of over
100 different markets such as
metals, energy, commodities,
currencies, interest rates, or
It started in 1870 …
T
he current economic crisis
banks collapsed, the British credit
is in fact more comparable
institutions withheld their capital.
to the collapse of 1873 than
The cost of credit, the inter-bank
the Great Depression of 1929.
rates, went through the roof. In
Many experts have identified
September,
parallel features between the
collapsed.
the
stock
market
current situation and the Great
Depression of 1929. But this
The situation today
comparison is lopsided.
Back to the 21st century. In
2001, loans were extended to
In 1929, the economy collapsed
homebuyers who were barely
on
able to afford a mortgage, even
the
back
inventories,
the
of
overspilling
stock
market
in the best of times. Real estate
crash, and Germany‘s inability
speculators took on excessive
to pay its war debts. This led to
risk and repackaged debt into
rising pressure on the British gold
complex securities. 2007 saw
reserves. None of these factors is
more than two million petitions for
currently of significance. The crisis
foreclosures. By that date, trillions
of 1873 lasted four years and was
of USD had already been invested
characterized by problems that are
in these credit derivatives.
reminiscent of our situation today.
In Europe, it started in 1870.
The lesson learned from the 1873
crisis? If Wall Street banks fail, the
Collapse
fallout will not remain limited to
During Austro-Hungarian rule in
the worldwide financial markets
Prussia and in France, the heads of
and to a brief period of time. The
state supported lending institutions
long-lasting reconstruction of the
which extended mortgages for the
banking sector will also lead to a
Supplement to “Frank Leslie’s Illustrated Newspaper” on October 4th, 1873: “The
construction of public buildings. In
steep rise in unemployment.
great financial panic”
when it became clear that the
Go west
United States. The current crisis
expectations of economic growth
After 1873, the centre of gravity of
shows another move in the same
had been excessively optimistic.
the global credit markets shifted
direction: From the US to China
When
westwards, from Europe to the
and India. Go west!
May 1873, the system collapsed
the
Central
European
equity indexes. With the wide
range of investment options
to choose from, global
investment risk goes down.
Christian Baha on the situation of the markets
But only a clear strategy
can lay the groundwork for
long-term performance. Since
the outbreak of the financial
crisis, the Superfund trading
strategy, which relies on fully
automated computer systems,
has once again demonstrated
the superior value of its
approach: Since its inception,
the Superfund Q-AG1) yielded
+776% in added value.
Reassessing risk
It has often been argued
that the risk of managed
futures funds is high compared
with
other
investment
instruments. This argument
fails when comparing tem­
porary drawdowns which,
even in times of weak
trends, prove to be tolerably
low with managed futures
funds. What makes matters
worse for equity investors is
that equity markets do not
move independently of each
other, but market rallies and
downturns develop parallel
to each other in different
markets, with only slight
time lags. This means an
additional risk for investors
who believed they had spread
their funds widely on different
markets. Those who wish to
escape these tandem moves
must take care to diversify
their investments broadly.
A class of its own
Investors who thought that
hedge funds were a panacea
against sluggish equity or
“The quality of managed
futures funds is equally
apparent when equity
markets tumble.”
– Christian Baha
Founder and owner of Superfund
FUTURE: Last year, Superfund funds performed very well. What
In view of anticipated inflation,
Christian Baha: What the financial crisis has clearly demonstrated
I predict a further rise in the
is that the high quality of managed futures funds is equally apparent
gold price over the next three
when equity markets tumble. If the global crisis continues in 2009, this
to
will become even more obvious. Even futures funds may experience
political measures taken by the
drawdowns now and then, but this is how markets work. The recovery
governments of a number of
phases are much shorter than stock markets, however.
countries, and rising inflation, will
source: TeleTrader. Period: 03/1996
five
years.
The
radical
also push the price of gold up
When investing money, high
will work as long as people tend
returns are only possible if
to follow the crowd. And they will
one takes high risks. Does
never stop doing this because it’s
You have repeatedly warned
this rule still apply in the face
human nature.
investors of the excessive risk
of the financial crisis?
further.
in equities and you have been
This year, can you see any
proven right. What do you think
actually
particularly strong trends in the
stockholders should do now?
funds
financial markets, which may
invest in more than 100 markets
be profitable for Superfund
By no means follow the widely
worldwide and thus spread risk
funds, yet?
given recommendation to hold on
This
assumption
incorrect.
is
Superfund
to your declining stocks. Wait for
widely. In addition, we employ
strict risk management – we
To be honest, no, we haven’t. The
a bear rally and sell your stocks,
never risk more than 2% of
trends seen in the past weeks and
reduce
fund assets to one position –
months remained the same: Falling
and the share of stocks in your
and earn extraordinary returns
commodity futures markets in the
portfolio. You may keep or even
through the compound interest
energy sector, a drop in equity
buy selected equities that do not
effect. Depending on the risk-
markets, rising bond markets.
suffer dramatically in crises. My
return
1) Superfund Q-AG (closed fund),
is gold going to perform?
are your expectations for 2009?
profile,
your
stock
holdings
tip: Definitely increase the share of
good-quality
managed futures may earn 18%
The gold price is up again after
gold and managed futures in your
to 30% per year net of fees. This
dropping last November. How
portfolio.
to 12/2008. Past performance is not
indicative of future results.
Note: This article does not constitute investment advice and is by no means intended to replace any such advice.
8∫ FUTURE | High returns in times of crisis
Managed Futures vs. Hedge funds
CASAM CISDM
Distressed Sec.
CSFB/Tremont
Hedgefunds Index
+35 %
For a long time, managed futures
funds were mentioned in the
same breath as hedge funds.
Superfund
Q-AG1)
–20 %
An asset class of its own
Inappropriately,
as
managed
futures funds are a separate asset
class with little correlation to other
–19 %
asset classes. This was particularly
Period: 1/08 – 12/08, Source: TeleTrader
evident over the past 12 months,
In 2008, Superfund Q-AG
when
emerged clearly as the winner
strategy successfully earned high
strategy when compared to
returns over the course of the
hedge funds. While Superfund
year. Hedge funds, by contrast,
Q-AG1) gained +35.4%,
were hit head-on by the credit
despite the financial crisis, the
crunch.
performance of hedge funds,
and lending dried up completely.
such as distressed security
In
funds, for example, racked up
hedge funds lacked collateral for
losses of –20% and –19%. In
their lucrative transactions. The
terms of risk-return, Superfund
outcome: Disappointed investors
The Chicago Board of Trade (CBOT),
Q-AG1) clearly outperforms
asked for their money back, which
founded in 1848, is the world’s oldest
many hedge funds.
accelerated the downward spiral
futures exchange. It handles more
even further.
than 50 different types of forward
1)
the
Superfund
Financing
the
absence
trading
costs
of
rose
leverage,
transactions.
bond performance were
proven wrong in 2008. Hedge
funds that were previously
hailed for generating positive
returns even in falling markets
came
under
enormous
pressure. And this does not
even include those hedge
funds operated by the once
“star investment manager”
Bernard
Madoff
who
defrauded investors of some
USD 50 billion with his giant
Ponzi scheme. Hedge funds
found themselves in a tight
spot, because of their need
for bank credit to leverage
their investments. According
to Credit Suisse figures,
hedge funds were down by
an average of –19% between
January 2008 and December
2008. Managed futures funds,
on the other hand, which are
part of this index, remained
above
water, recording
average gains of +18%. This
overview clearly shows that
2008 at a glance
February: +14.2 %
May: +6.5 %
Superfund Q-AG1)
In February last year, Superfund
Superfund Q-AG1)
The
+14 %
Q-AG
+7 %
confirmed that since the beginning
–1 %
World Equities (MSCI)
Period: 02/2008, Source: TeleTrader
1)
gained +14.2% on the
back of strong trends in the
European
Central
Bank
of 2008, large companies have
energy, metal, and currency
had difficulties raising new credit.
markets. The demand for gold
The price of crude oil continued
rose as investors looked for an
alternative to the USD and a
hedge against inflation. On 29th
February 2008, Comex Gold
+1 %
World Equities (MSCI)
Period: 05/2008, Source: TeleTrader
its surge, climbing to a level of
USD 130 as US supplies ran
low and demands were made
to tap into strategic oil reserves.
traded at close to USD 977.
Analysts considered a rise of
Superfund funds also profited
oil prices of up to USD 200 per
from the rise in the price of
barrel feasible. The Superfund
heating oil. This rise was due to
trading strategy was unaffected
falling inventories, lower refining
by
capacity,
the
dimming
economic
winter
conditions. The energy sector
weather in the North-east and
returned high profits. Heating
Mid-west of the US. At the same
oil, gasoline and natural gas
time,
outlook
contributed the most to the May
began to cloud over in Europe
result. Superfund Q-AG1) closed
and in the US. Mention of the
the month up +6.5%.
the
and
severe
economic
word “recession” was still being
avoided.
High returns in times of crisis | FUTURE ∫9
managed futures funds, such
as Superfund funds, cannot
be lumped together with
other hedge funds, but should
be considered an asset class
of their own, as has been the
case in the US for quite some
time.
The trend is
your friend
Those who consistently
employ the right strategy
know how to capitalize even
on short-term trends in the
financial markets. The fully
automated Superfund trading
systems achieved strong
gains, especially in February,
May, and June 2008. The best
performance was recorded in
October of last year with a
monthly gain of +17.5%.
Managed Futures vs. Equities
Equities as a risk factor
Long-term
The past ten years
Those who hold equities in
A look at absolute returns reveals
With a maximum decline in value
their portfolios run a high risk.
a world of difference between
of –46%, the equities of the 500
To achieve sustainable asset
Superfund
global
largest US groups lost much more
growth, markets have to rise over
equity
investor
than Superfund funds, which in
long periods. Superfund funds, on
that
purchased US equities 10
the worst period were down by
the other hand, can earn money
years ago would have lost more
only –20%. DAX investors and
even if the equity markets move
than 26%. On the Tokyo stock
holders of Japanese equities in the
sideways or tumble. The risk of
exchange, more than one-third of
Nikkei Index fared even worse: In
stock market crashes is nothing
his money would be gone. The
these markets, the worst slump
new. The current financial crisis
Superfund trading strategy has
annihilated more than 61% of
is just adding another chapter
gained +400%1) in the same time,
asset value.
to the history of steep market
increasing the investment fivefold –
slides.
by more than +17% per year1).
The 10-year comparison
highlights the strength
of the Superfund trading
funds
markets.
and
An
+ 300 %
Superfund Q-AG1)
S&P 500
Nikkei 225
+ 200 %
+ 100 %
strategy. +400% versus
substantial losses in EU
and Japanese equities.
0%
1) Superfund Q-AG (closed fund).
Past performance is not indicative
Period: 01/1999–12/2008,
of future results.
Source: TeleTrader
June: +9.9 %
1999
'00
'01
'02
'03
'04
'05
'06
'07
'08
October: +17.5 %
Rumors surrounding the US
Superfund Q-AG1)
The US government mentioned
Superfund Q-AG1)
bank Lehman Brothers proved
+10 %
for the first time a USD 700
+18 %
substantiated. In Europe, inflation
billion bailout package for the
hit 4%. The US Dow Jones Index
troubled financial sector. On
dropped below the key level of
11th October, the German DAX
12,000 points. Worldwide, equity
markets were weighed down
massively by slowing economic
growth and rising unemployment.
2009
–8 %
World Equities (MSCI)
Period: 06/2008, Source: TeleTrader
equity index slipped to its lowest
level since 2005. Equity markets
went on a freefall worldwide. The
fear of global recession became
Stock market indexes dropped
increasingly pronounced. The oil
by between 6% and 10%. While
price plunged. In this situation,
Superfund funds capitalized on
which was highly precarious for
the energy sector in February
a number of countries, for the
and May, in June it derived most
worldwide economy and for the
of its profit from falling equity
equity markets, the Superfund
prices. Additional income came
trading
from the right positioning in
best monthly result of 2008, up
maize futures. The performance
by +17.5%1). Again, the biggest
for Superfund Q-AG1) for the
contributions to this rise came
month was +9.9%.
from equity positions. Further
strategy
returned
its
gains were earned on futures on
the British pound.
–19 %
World Equities (MSCI)
Period: 10/2008, Source: TeleTrader
Gold | FUTURE ∫11
All that glitters is
GOLD
G
old has always fascinated people the world over and now the precious metal is making a brilliant comeback
as the world slips further into economic crisis. Gold was one of the first metals that was coveted and used
by humankind. Gold also played a key role in the development of many currency systems.
The very first use of gold,
for making jewelry, can be
traced back as far as the year
3500 BC. Whether a certain
Croesus in the 6th century
BC was the first to mint gold
coins and issue them as an
official means of payment, is
historically disputed.
Gold today
Anyone who wants to
buy gold today can acquire it
in the form of gold jewelry,
coins, or bullion bars. Gold
is also used in medicine. The
biggest buyer is the jewelry
industry, though.This industry
alone accounts for about twothirds of the annual demand
for gold. Gold jewelry is
still a status symbol, highly
prized in emerging-market
countries such as India and
A government that owns an
China. Wealth in these regions
ounce of gold (31.3 grams)
has risen significantly over
needs the permission of
recent years. Demand for
neither the US nor anybody
gold jewelry
else’s to turn it
“Gold is the
has thus been
into cash. The
only true
steadily rising
supply of gold
currency. It
while annual
is limited. This
preserves
production has
is what makes
wealth. It has
been declining.
it so desirable.”
done so in
Ten years ago,
the past and
Stable in
South Africa
will do so in
value
still produced
the future.
Gold can
600 tons. Now,
Worldwide.”
never lose its
its output is
value, as may
down to 230
Christian Baha
be the case
tons per year.
with equities. Gold will
Today, the new number
always find a buyer, regardless
one producing countries is
of the situation in the world
China. The New York Times
markets. Unlike paper money,
defined the true value of
gold cannot be duplicated at
gold very concisely: “Gold is
will, as it cannot be created
a possession, not a promise.
artificially. On the other
hand, the demand for gold
has been rising steadily. In
September 2008 alone, Münze
Österreich (the Austrian
mint) sold 100,000 ounces of
“Vienna Philharmonics” coins.
Normally, it takes half a year
to sell such a quantity. The
strong demand for the rare
metal has also had an impact
on its price. During the past
five years, the price of gold
has doubled.
How long will
the boom last?
In the 1970s, the gold
price rally turned out to be
a big speculative bubble. This
time around, the situation
seems to be different.
12∫ FUTURE | Superfund & Gold
∫13
Scoring
two Goals
at the same time
F
or investors, this could be
described as a typical win-win
situation: On the one hand, gold
adds more stability to any portfolio
in times of market turbulence. On
the other hand, managed futures
funds may generate profits in
rising and falling markets and
hedge a traditional securities
portfolio against losses. Superfund
Gold funds combine these two
advantages.
The Superfund
Gold Funds
+40 %
World
Equities
(MSCI)
+6 %
Gold
USD/oz
Superfund
Gold*)
Since Professor Harry Markowitz
was awarded the Nobel Prize for his
Modern Portfolio Theory in 1990, it has
been widely accepted that: A broadly
diversified portfolio is the basis for
long-term investment performance. As
past experience has shown, the price of
gold has historically moved in a different
direction from equities. equities. Gold
thus meets the demands made by
Markowitz for a portfolio investment.
In addition, gold protects capital against
inflation and promises a significant
appreciation in value in times of crisis.
With gold, positive diversification effects
can thus be achieved in a portfolio.
Gold assets should therefore always be
regarded as part of a portfolio and used
as a buffer against risk.
Like gold, alternative investments,
such as managed futures funds, may have a
strong positive effect on the performance
of a traditional securities portfolio in the
Why tie a fund to the price of gold?
G
old is regarded as a crisis-resistant
dramatic flight into gold by a rapidly increasing
investment and a hedge against
number of investors. Also, gold diversifies a
inflation. It is less exposed to inflation than
portfolio and thus reduces global risk. Gold
the purchasing power of a currency. While
is relatively uncorrelated to equities, bonds
the value of gold has, in fact, fluctuated
and a large number of other asset classes.
in terms of the purchasing power of key
Particularly in times of uncertainty triggered
currencies (see chart below), it has not
by international conflicts (wars and terrorist
depreciated over a period of almost 40
attacks), dramatic slides on the stock
years.
exchanges (market crashes) or in times
of economic difficulty of the kind we are
–42 %
Huge returns: Combining the Superfund
Rising government debt and the worldwide
currently witnessing, gold has usually risen
economic crisis are increasing the pressure
significantly in value, as it is perceived as a
on major currencies. This could trigger a
safe investment.
trading strategy with the gold price
*) Simulated performance: Superfund Gold is
Purchasing power of gold
5$
Gold
shown as a combination of the Superfund
A-strategy (Superfund Q-AG, closed fund) and
the gold price (USD/ounce) over a period of one
year (01/2008 – 12/2008). Simulated performance
results are provided for informational purposes
1971
USD
1980
1990
1$
2000 2005
0,2$
only. Past and simulated performance is not
indicative of future results. Source: TeleTrader.
Source: Bloomberg; Period: 01/1971 – 10/2008
Gold in times of crisis
Gold
USD/oz
World
Equities
(MSCI)
+6 %
+7 %
+13 %
+4 %
–7 %
–9 %
–11 %
–11 %
09/1990 09/2001 09/2002 11/2008
Gulf war WTC attack War in Financial
Iraq
crisis
Source: Bloomberg
14∫ FUTURE | Superfund & Gold
Sources &
Production
About 40% of the gold that is mined today
comes from China, the US, South Africa,
and Australia. China has become the world’s
long run as gold reduces the risk of loss
of the global portfolio and increases its
return. Especially in times of crisis, it
is important to have such an airbag in
one’s portfolio. So what is more obvious
than to combine both these advantages?
Superfund Gold funds offer investors
both benefits in one product.
number one producer of gold. Annual output
amounts to about 2600 tons — which
means that in a period of two years, more
gold is produced than in the one thousand
years of the Middle Ages. The problem in
producing gold is separating it from the rock.
When talking about gold ore, we mean rock
containing gold.
Gold panning
Gold panning in Vienna, at the Superfund stand
at the Gewinn Fair 2008.
The simplest gold extraction process makes
use of the high density of the metal. With
gold panning, gold is usually extracted from
stream sediments. Water is added to goldcontaining sand or grinded rock. As gold is
heavier than the surrounding sand, it settles
faster to the bottom. The liquid flowing off
is passed through fur. Minute gold particles
getting caught in the hairs of the fur increase
the yield. Today, this process is still being
used by hobby gold-seekers, but it is very
time-consuming and the result is relatively
unprofitable.
Superfund and gold
The synergies between the Superfund
trading strategy and gold are irrefutable.
The Superfund trading strategy values
broad diversification. Futures contracts
are traded around the globe. Beside bonds,
equity indexes, and foreign exchange,
trading is also done in commodities such
as crude oil, wheat, coffee, or cotton.
The trading system
Buy and sell signals are calculated
by the computer in a fully automated
process from a variety of indicators and
historical price data. The Superfund trend
following trading systems therefore avoid
inappropriate, emotion-driven decisions,
as a computer has no feelings and sticks
relentlessly to the defined strategy.
Trends may continue for a few days or
several months. The systems not only
track rising but also falling markets to
generate returns.
The
most
important
role
in
Superfund & Gold | FUTURE ∫15
the Superfund trading strategy is
played by risk control. Global risk is
continuously monitored. Losses are
stopped automatically by means of
continuously updating stop-loss-limits.
The consequence: A price slump, as in
equities, is highly unlikely.
The Superfund Gold Funds
The Superfund Gold funds are tied
to the price of gold and are offered in
two forms (Strategies A and B). Strategy
A offers a lower-risk entry option, and
investors who wish to invest money longterm (for a minimum of five years), can
benefit from the solid return potential of
this strategy. The more dynamic Strategy
B is an ideal solution for experienced
investors looking for high return
potential.
Gold bullion
One delivery bullion bar (995‰ fineness)
Professional investors have known
already for some time that gold by itself
is no longer a “safe haven”. The desired
positive diversification effects for the
portfolio come only from when combined
with other, independent investments. A
managed futures fund combined with
gold, such as the Superfund Gold Fund,
can attain this goal in the long run, as
it profits from both the rise in the gold
price and from one of the most successful
computer trading systems worldwide.
contains 12.44 kg (400 ounces) of gold. Gold
is also made in bars of 10, 20, 50, 100, 500
and 1,000 grams, with a fineness of 999.9‰
and is purchased mostly by private investors.
With bars of less than one kilo, the spread
(the difference between the banks’ bid and
asking prices, which closely follow the gold
price) is higher and may occasionally
amount to more than
5%.
Degrees of fineness
Carat
Designation
content (wt./atom)
Historically, the fineness of gold has always
24 kt
Fine Gold
999 ‰
100 %
been quoted in carats. 24 carats denote
22 kt
Gold 916
916 ‰
83 %
pure gold (fine gold). Upon introduction of
20 kt
Gold 833
833 ‰
68 %
the metric system, the measure for fineness
18 kt
Gold 750
750 ‰
50 %
was changed to “parts per thousand”. Thus,
14 kt
Gold 585
585 ‰
38 %
a “750” hallmark on gold products means
10 kt
Gold 417
417 ‰
23 %
that 1000 parts of the metal (by weight)
9 kt
Gold 375
375 ‰
20 %
contain 750 parts of pure gold.
8 kt
Gold 333
333 ‰
18 %
16∫
Did you know …
… that if all the gold
ever mined were combined,
it would only make a
cube of 20 metres?
Gold
115 m
Until recently, South Africa was the largest
gold producer in the world, but it has
recently been overtaken by China. The
precious metal was discovered by Egyptian
workers under a fireplace as early early as
4BC and was used as a means of payment
in the time of Alexander the Great. It was
the Ancient Greeks, however, who used
gold in the shape of coins as money. The
legendary monarch Croesus is said to have
been the first to have coins minted from
pure gold (550 BC). The term “gold” comes
57 m
from the Indo-Germanic word “ghel”,
which means blank and shiny, but also
yellow and glittering. Gold cannot be made
artificially nor can it be multiplied, but, unlike
diamonds, it is divisible, homogeneous and
therefore can be put together again. Gold
never rusts.
20 m
∫17
Life is
full of
RISK
T
rend followers believe that there is a balance in life between risk and
reward. Life is full of risks. We are forced to accept that life is a game
of opportunities. There is no way of avoiding having to make decisions.
But decisions entail risks. Hiding
‣‣ What does the competition
look like?
your money under the mattress is not
‣‣ How high is the risk?
a solution. Buying a house? The house
‣‣ How do we want to achieve success?
could burn down or the real estate
market could collapse. Investing in your
These questions also need to be
own company? The company might go
answered by a good trading system.
bankrupt and then you would lose your
job and housing all at once. Buying an
Many people believe that the amount
investment fund? Pray that the hollow
of risk is always directly proportional
mantra of “buy and hold” works for you
to what we want to
and that you will not be
achieve. But there is
hit by a stock market
“Only people that
hope, because there
crash at age 65.
use their courage
are two types of
to take advantage
risk: Blind risk and
How should we
of opportunities
calculated risk. The first
deal with risk then?
are rewarded.”
one is suspicious. But
We have to accept
calculated risk creates
that the market does
wealth, nations and empires. Calculated
not reward stupidity over the long term.
risk and courageous visions go hand
Only people who use their intelligence,
in hand. Use your head, recognize
courage and resolution to take advantage
opportunities, work out things logically
of opportunities are rewarded. Think
and then move forward forcefully.
of your money from an economic
Trend followers achieve success by
standpoint. The objective is to let your
taking calculated risks.
capital work for you in the hope that it
will multiply. The right decisions lead to
Trend followers do not
success, the wrong ones to failure. These
think about what the markets
questions should be answered in any
will do tomorrow. They can’t
good business plan:
change events or predict the future. They
‣‣ Where are the opportunities
just simply think like this. Generally,
of my market niche?
good risk management combines several
‣‣ What does our response to
elements:
market demands look like?
‣‣ How good are our chances?
‣‣ Make the trading and risk
‣‣ How can we earn money?
management system clear to
translate into a computer code
‣‣ Back-testing and load-testing
to determine the sensitivity
of the trading parameters
and the ideal values
‣‣ Inclusion of diversification
and selection of instruments
in the back-testing process
‣‣ Clear definition of volatility
and return expectations
‣‣ Maintaining a good partnership
between investor and manager
‣‣ But above all: Stick to your strategy!
Michael W. Covel
Michael Covel is the founder and CEO of Trend Following™ and knows all the major successful trend-following investment
managers. For the past 10 years, Covel has been working as an expert consultant in trend-following matters for individual
traders, hedge funds and banks.
18∫
One
Mile
Report
tokyo
M
Tsuchiya Hironori,
Superfund Japan
odern life rubs shoulders
with the past on the streets
of Tokyo. Don’t be surprised to
see locals, both young and old,
dressed in the traditional kimono
or yukata browsing through
designer-name boutiques and
high-tech shops. A global hub for
fashion, technology and finance,
Tokyo is a city that never sleeps.
A city of superlatives, Tokyo has
the largest railway station in the world,
servicing over two million passengers a
day; the most photographed intersection
in the world; and the world’s largest fish
market. And since the Japanese love to go
out to eat, the city has more than 400,000
restaurants and bars. The Michelin Guide
reports that Tokyo has more star-rated
restaurants than Paris, London and New
York altogether.
One Mile Report:Tokyo | FUTURE ∫19
20 Locations worldwide
Superfund companies have offices around the globe, with prime city locations in Amsterdam, Chicago, Dubai,
Frankfurt, Grenada, Hong Kong, Luxembourg, Milan, Monaco, Montevideo, New York, Paris, São Paulo,
Singapore, Stockholm, Sydney, Tokyo, Warsaw, Vienna and Zurich. In this issue, FUTURE unveils the culinary
delights of Tokyo.
20∫
Welcome to tokyo
TSUKIJI FISH MARKET
Tsukiji Honganji Temple, a Buddhist temple in the heart of Tokyo.
Tokyo is located in the Kantō region in the
region is the financial, industrial, commercial
eastern part of the Island of Honshū in Japan.
and cultural center of Japan, boasting many
The formerly insignificant fishing village of Edo
universities, academies, research institutions,
has been the center of politics and government
theatres and museums. Today, Tokyo is one
of the country since 1603. Tokyo has also been
of the most fast-paced, modern cities of the
the official capital of Japan since 1868 and the
world and stands alongside New York and
seat of the Tennō in the Imperial Palace.
London as one of the top three global financial
centers. With close ties to its Japanese
Almost 10 million inhabitants live in the 23
traditions, Tokyo is also constantly setting new
wards of the city of Tokyo. Around 40 million
trends in many areas such as in fashion and
live in the urban agglomeration. This makes
entertainment electronics.
Tokyo has the largest seafood market
in the world. The market is located
in the ward of Tsukiji in the centre
of Tokyo and is a major attraction for
foreign tourists. In the inner market,
there are daily auctions of fresh fish,
and the outer market is lined with shops
that sell typical Japanese kitchen tools
as well as sushi restaurants offering the
delicacies of the Far East. The Tsukiji
market employs around 60,000 to
65,000 people and deals in more than
400 different types of fish.
Tokyo the largest metropolis in the world. The
‣‣ Tsukiji, Chuo-ku, Tokyo
‣‣ Distance: approx. 1.2 km
‣‣ Price class Map
Tokyo – Love at first
1
M
i le
Tokyo
Known around the world: Sushi – raw fish on rice
One Mile Report:Tokyo | FUTURE ∫21
Ginza Kyubey
Kazahana
Kabuki-za Theater
In business ever since 1936, Ginza
Kyubey is one of the most famous
restaurants in Tokyo and is well known
by gourmands for the high quality of
the sushi it serves. No trip to Japan is
complete for Christian Baha without
a visit to Ginza Kyubey, his favourite
restaurant in Tokyo. The Superfund
founder and owner always orders
“omakase” – a meal recommended by
the chef. Ginza Kyubey is a welcoming
blend of traditional and modern
Japanese architecture; the friendly team
of cooks work with their knives in full
view of the guests, demonstrating how
sushi is prepared.
If you want to eat good food, you
have to aim high. Located on the 28th
floor of the Conrad Tokyo Hotel, the
Kazahana Restaurant offers guests
a magnificent view of the Royal
Hamarikyu Garden and the Rainbow
Bridge. A visit is a must for anyone going
to Tokyo: The teppanyaki prepared by
the personal cook right in front of the
guest is a speciality of the house. And
the Japanese beef attracts diners from
far and wide. The elegant décor of the
Kazahana Restaurant is an expression of
the motto of Kazahana: “Flowers in the
Wind”. The restaurant is open for both
lunch and dinner.
The Kabuki-za Theater near the
Superfund office is Tokyo’s leading
theater for traditional kabuki-drama
(Japanese dance). The theater was
founded in 1889 and is a unique display
of Japanese architecture. The only thing
the building lacked was protection
against natural disasters. In 1921, it
was destroyed by fire and in 1923
by an earthquake. There are plans to
replace the theater with an earthquakesafe building in 2010. There are daily
showings at Kabuki-za, and often
separate matinee performances before
the evening event.
‣‣ Ginza 8-7-6, Chuo-ku, Tokyo
‣‣ Distance: approx. 300 m
‣‣ Price class ‣‣ 1-9-1 Higashi-Shinbashi,
Minato-ku, Tokyo
‣‣ Distance: approx. 800 m
‣‣ Price class ‣‣ Minami-Azabu 3-5-40,
Minato-ku, Tokyo
‣‣ Distance: approx. 3 km
‣‣ Price class bite
Sushi is a Japanese dish that consists
Kaiseki refers to a snack meal that was
mainly of cold, vinegared rice with either raw
served at a Japanese tea ceremony. Today,
or smoked fish and presented in appetizing
the term refers to a special style of light
bite-sized servings.
meal served at a Japanese restaurant.
Teppanyaki are meals cooked on a steel
Soba are thin brownish-gray noodles made
griddle (teppan) directly at the table. In
of buckwheat. Soba noodles are usually
restaurants that serve teppanyaki, the
served cold and in a separate bowl. The
teppans are integrated into the preparation
soup is served either cold or hot depending
areas on the counters and built into the
on the season and accompanied by a cup of
diners‘ tables.
different toppings and seasonings.
Tempura is a method of preparing deep-
Udon are thick noodles made of wheat flour,
fried battered food. Different types of meat,
salt and water in a wide variety of widths
fish, mushrooms and vegetables, as well as
and shapes. As the noodles taste salty
sprouts and leafy vegetables are dipped in a
themselves, they are usually served with a
mix of wheat flour, egg and ice water before
relatively mildly seasoned soup.
being fried quickly in hot oil.
Kaiseki: A light menu
22∫ FUTURE | Interview: Senator Richard Shelby
exaggerated in doing so. For a while,
they earned good money by working like
this, then they wrote off huge sums that
they securitized and sold as securities,
and now, it is these securities that are
crumbling.
“I do
NOT SEE THE LIGHT
at the end of the tunnel.”
Senator Richard Shelby
FUTURE: You voted against the USD 700 billion bailout package for the
financial sector. Why?
Senator Shelby: I voted against it on principle. I believe that nothing can be so big that
it cannot fail. I have never believed this. When I was still a young congressman, I voted
against the Chrysler rescue package. These types of interventions hinder the market.
It is clear to me that our financial system
carries systemic risk. This risk still exists.
The bailout has not solved the problem.
It will cost us a lot more money before
it is over. We are talking about a sum of
USD one trillion and more.
Above all, if one adds the proposed
rescue package for the automobile
industry …
I am against it. I believe that these
companies have already failed. General
Motors has lost USD 75bn in the past five
years. And Ford’s model doesn’t work.
The liquidity crisis in the banking
sector is having an effect on the
entire world. How will the interest
rate curve develop in the coming
years?
The banking business is built on trust.
What is lacking now is trust, because
some people have not performed.
Basically, I do not believe in the merits
of regulation. I do not believe it to be
right to over-regulate and tax companies,
because they should be innovative.
Nonetheless, we will have to reorganize
our regulatory system. But we have to
do it right. When products are brought
to the market, these have to be approved
by someone and this has to be backed by
capital. It will take years until we regain
trust throughout the world.
Is there light at the end of the
tunnel?
The problem with sub-prime securities
has still not been solved. Many banking
institutions are sitting on sub-prime
loans amounting to USD one trillion. The
money that has been pumped into the
rescue plans has not been able to solve
the problem either. I do not see light at
the end of the tunnel. Can you see it?
Not at all. And the next thing to
topple could be the credit cards.
You are completely right. It is the banks
own fault. They have lent enormous
amounts to young people, people
with doubtful creditworthiness – and
In the light of this new world, what
do you perceive your role to be as
a ranking member of the Banking
Committee?
I believe that both parties must play a
role. Senator Dodd and I both believe
that the right thing to do would be to
implement a well-thought-out reform
of the financial system. Hedge funds
have always carried a risk and supplied
liquidity to the market. And we need
both. But if these products are too tightly
regulated, then the regulators should also
know this. We should not over-regulate,
as the market needs a certain amount of
risk.
How much government is too
much? Are you worried about
knee-jerk type responses?
In fact, I do not believe in that type of
response at all. This is the worst type of
legislation; the same kind that gave us
the Sarbanes-Oxley Act. It has brought
too much regulation. In my opinion,
we should act cautiously and carefully,
because otherwise we will destroy the
market instead of strengthening it. On
the other hand, I believe that the times
of weak regulation are over, because
people are afraid. They are nervous. Do
you know how high our government
deficit will be this year? Around USD
one trillion. This is the largest deficit that
the world has ever known. And it might
become even larger.
That’s true. Taxpayers have not
grasped that some of the regulatory
changes will have a negative effect
on their lives.
That is possible. If you are not careful
when making regulatory changes, the
market could dry up. In the past, I always
thought the market would take care of
everything, and I still believe this. But
the government does not let the market
do it.
Richard Shelby
Richard Shelby has been very busy in the past few months – thanks to the economic
crisis. After the first crash in the banking industry and the collapse of the real estate sector,
the US automobile industry is now toppling. The Senator from Alabama was critical, even
then, that more cash would be burned for rescue schemes. He explains the magnitude of
the financial disaster in an interview.
24∫ FUTURE | Interview: Senator Richard Shelby
Biography
I am concerned that Superfund
will be lumped in with the other
investments viewed as very risky
even though the market for
managed futures is subject to
stringent supervision and has
performed very well with a number
of educational measures.
Your fears are well-founded. This is
precisely what is bothering me: Wrong
regulation or overregulation. I therefore
hope that we will be wise enough and
brave enough.
Richard Craig Shelby
Born: 6 May 1934, Birmingham, Alabama
Republican Senator in Alabama
Career
Shelby studied law at the University of
Alabama and worked from 1963 to 1978
I believe that the
attitude towards
hedge funds is
so negative right
now that anything
that deviates from
the norm will
be viewed with
apprehension.
stayed until he was elected to the House
nervous all over the
world and are not
spending money. They
are up to their ears
in debts. This is a
ticking time bomb.”
Hedge funds will not disappear. They are
not against the law.
of Representatives of the US in 1978. He
was re-elected three times; in 1986 he won
the Democratic nomination for the Senate
seat and was re-elected in 1992. In 1994,
Shelby switched to the Republican party,
Neither should they be, because
they feed liquidity to the markets.
Many of the best managers in the
world manage hedge funds.
and was re-elected in 1998 and 2004 with a
clear majority and is now a member, among
others, of the powerful United States Senate
Committee on Appropriations.
Richard Shelby today
Shelby lives with his wife Annette Nevin
Shelby in Tuscaloosa, Alabama. They have
two sons, Richard Jr. and Claude.
Is it also true for hedge funds that
only the strong survive?
This is the nature of the market. For this
reason, I believe that the government
should stay out.
But it won’t, it will
“People are
intervene.
as city prosecutor. In 1970, he was elected
to the Alabama State Senate where he
Of course. But the average consumer
will never have as much experience as
the people who work in this industry.
Therefore, they have to be informed. It
will be necessary to explain it to people,
because they have burned their fingers.
They are afraid and nervous.
They will attract investors, intelligent
investors, because they will be motivated
to perform, right?
This is an attractive market
for Superfund. Do you believe
that investors should consider
alternative asset classes instead
of putting their money only into
stocks and bonds?
What do you think
about the role
of
government
bodies in the near
future?
I believe that the
government should be like a kind of
referee. It does not play in the game, but
it makes sure that the game is played fairly.
But now, the government is joining the
game. This makes me worried. Nobody
knows where this will lead. This is not
capitalism, but a type of social dirigisme,
with the government playing the leading
role. But when things get really tough,
people have more trust in government
than in the private sector.
If one takes all of this into
consideration, isn’t it surprising
that the USD is still so strong and
gold is not doing even better?
Don’t you agree that it is partly a flight
to safety after seeing what is happening
Rescuing the US economy
Save yourself if you can
Money flows
The Emergency Economic Stabilization Act
The law that entered into force on 3 October
(EESA) in the US, the law passed to stabilize
2008 states that the US Department of the
the economy on 19 September 2008, is a set
Treasury is permitted to buy so-called toxic
of rescue measures presented by the Bush
assets if the seller is a financial institution and
administration to support the US financial
meets certain criteria. The Treasury had USD
market and includes schemes worth some USD
250bn at its disposal for purchasing toxic assets
700bn that are defined in detail in the support
at the time the law entered into force.
program for ailing assets.
∫25
Richard Shelby in an interview with Paul Wigdor (Superfund USA) at the office of the Senator.
in other countries? It is said that the
intervened or had banking stocks
German economy is slipping into
depreciated. What does Superfund think
recession. You know
about the oil price?
what that means
“When Germany
for Europe: When
If people start to
gets a cold, everybody panic, it could
Germany gets a
else gets pneumonia.”
cold, everybody else
drop even further.
gets pneumonia. The
We do not decide
strength of the USD
if it goes up or
is based on declining commodity prices.
down. We simply follow the trend.
People are nervous and are not spending
money. A ticking time bomb.
All of this is psychology, right?
Let’s look at Japan. The Japanese
market has been stagnating for
over 27 years.
And the government there has not
Do you invest
customers?
100%
for
your
Due to the wide fluctuations on
many markets around the end of
2008, the system reduced many
positions and the cash share in
the portfolio is very high now. As
soon as a clear trend emerges, the
system will invest again. As usual,
fully automatically and without
any emotions.
Exactly. The herd mentality. We
look for trends in more than
100 markets and invest in these
irrespective of whether the trend
is to move up or down.
Control
To carry out the intentions of the law, a new
authority was created: the Office of Financial
Stability. At least 24 public officials will be
employed here soon to coordinate the work
of external financial service providers. It was
the stipulation of US Secretary of the Treasury
Henry Paulson to use the services of as many
external experts as possible when purchasing
the toxic assets.
The capitol is the seat of the US Congress (legislative body of the US). The Congress is made up of the Senate and
the House of Representatives; 535 representatives work there.
uperfund News
W
ith Superfund offices in 20 locations around the world,
there is never a shortage of news to report. In addition,
Superfund commitments extend beyond the world of finance to
take in a wide variety of sports and cultural events. Here is the
latest news from Superfund offices around the world.
Italy
Superfund Milan
Switzerland
Off-Piste and personal with Bode Miller
U
S skiing sensation Bode Miller
took time out at the Dolder
Grand Hotel in Zurich. Miller was
the star guest at the Superfund
event which brought together some
120 key customers, asset managers
and institutional investors.
The new Superfund office in Milan
T
he Superfund global expansion
programme has now reached
Italy. In 2008, Superfund SGR SpA
opened its first office in the centre
of Milan.
The assembled bankers and managing
directors of asset management companies
were presented with an informative
inisght into managed futures strategies
before being introduced to the 2008
overall world cup ski champion. Bode
spoke openly about his passion for skiing,
his career achievements and aspects of his
personal life. Notably impressed by his
own investment in Superfund funds, Bode
made some interesting parallels between
top-level skiing and the success of the
Superfund trading strategy. Afterwards,
he chatted freely with the guests at a
relaxed stand-up dinner, happily signing
autographs and posing for photographs,
until he left for the championship in Val
d‘Isere. The evening was a huge success,
thanks to Bode Miller’s input as the guests
learned first-hand about the benefits of
Superfund strategies in a relaxed and
informative atmosphere.
A pioneer in the Italian market,
Superfund SGR SpA is the first asset
management company specializing in
managed futures funds to launch in Italy.
It is also the first entirely independent,
privately-owned alternative investment
company.
The aim of Superfund SGR SpA was
to introduce the previously undiscovered
asset class of managed futures funds to the
Italian market, and to comprehensively
explain the advantages of this strategy
to potential clients. In order to meet
domestic expectations, a new fund is
currently being structured to cater
exclusively to Italian investors.
Closeup of a superstar. Bode Miller with the staff of Superfund.
Superfund News | FUTURE ∫27
Austria
Going for gold at the gewinn fair
Superfund Day 2008
The open-plan modern Superfund stand attracted a great many visitors.
Drawing a crowd on Superfund Day: Presents, prizes and talks
I
T
n 2008, Superfund
Austria once again
made its mark at
Austria’s most important
investment fair with two
eye-catching stands and
a variety of innovative
interactive features.
Aside from the lively
program of educational
presentations and stock
market games, Superfund
Austria played host to the
highlight of the three-day
investment fair by offering
visitors the chance to pan for
real gold, under the guidance
of a professional, to take
home as a souvenir. The event
proved extremely successful,
as shown by the enthusiasm
at the Superfund stand.
Germany
Superfund on tour
Superfund Germany also adopted an open-plan stand concept which
proved popular with visitors.
he spotlight was on
Superfund customers
on 30th and 31st October
2008,
as
Superfund
Austria hosted the fourth
annual Superfund Day.
More than 2,500 investors
gathered at the Investment
Centers in Vienna, Linz,
Graz, Innsbruck and Schaan,
to pick up their personal
gift packages and talk shop
with Superfund investment
experts in a relaxed, informal
setting. “Maintaining personal
contacts with our customers
is very important to us,” said
Superfund Austria Managing
Director Helmut Spitzer on
the success of these customer
events.
S
uperfund Germany in
the fast lane: On the
road with Friedhelm
Busch.
Leading financial expert,
Friedhelm Busch joined
Superfund staff on a
whistlestop
tour
of
Germany to promote the
new “Superfund Absolute
Return 1” fund. The roadshow
covered a wide range of highprofile events including the
prestigious Mercedes Cup
Tennis Tournament as well
as a series of stock market
days which proved extremely
popular with investors.
From left to right: Ronny Horst, Michael Harneit, and
Friedhelm Busch hit the road in Germany.
The tour’s information events throughout Germany
were always packed with interested investors.
28∫ FUTURE | Superfund News
And the WomEn’s World Award 2008
goes to … Ingrid Betancourt!
Former Federal Chanchellor of Austria, Alfred Gusenbauer, hands the Women’s World Award to Ingrid Betancourt at the gala event at Palais Coburg.
H
onour to whom honour is due. First held in the grip of kidnappers, now holding her
million people worldwide via TV, printed media
own award. Ingrid Betancourt was elected Woman of the Year 2008 as the first of 12
and radio. In Vienna, the special TV feature
winners to be presented this year’s prestigious awards.
was produced by John Cossette who was also
responsible for the “Grammy Awards“: “Vienna
On
26th
October
2008,
Women’s
six years in the jungle. She was freed in mid-
is a great city and turned out to be an ideal place
presented
the
2008 as the result of a spectacular intervention
for broadcasting the ceremony. We pooled
the
by the military. Renate Brauner, the Finance
all our know-how and created a Hollywood-
Columbian Green Party with the Woman of
Commissioner of the city of Vienna had worked
standard show here in Austria.”
The Year award for her work in promoting
intensively during Betancourt’s time as a hostage
democracy, freedom and tolerance at a
campaigning for her release.
World
the
Awards
former
Organization
presidential
candidate
of
The Background
In 2000, Nobel Peace Prize winner, Mikhail
ceremony held in Vienna‘s Palais Coburg.
Ms. Betancourt was presented with the prize
Hollywood in Vienna
Gorbachev joined forces with Georg Kindel to
by former Austrian Federal Chancellor Alfred
Superfund has been the Presenting Partner of the
found the World Awards – initially only for men,
Gusenbauer. “Ingrid is a survivor of pointless
Women’s World Awards since 2005. Following
that worked towards promoting global peace
terror and, at the same time, a messenger of
successful events in Hamburg, Leipzig and New
and tolerance. Mikhail Gorbachev: “Very soon, it
hope for all those who still live and suffer in
York, the 2009 Women’s World Awards were
became clear to us that we needed a separate
hopelessness.“
presented for the fourth time in Vienna. The
award for women to celebrate their outstanding
ceremony was followed by a gala dinner at the
achievements.” And so the Women’s World
Close to tears
Vienna City Hall with award winners and guests
Award was founded in 2004.
Betancourt was clearly emotional during her
from all over the world. The co-founder of the
short stay in Vienna: “I feel very honoured and
World Awards, Georg Kindel, summed up the
Five years later, the awards have finally returned
see this award as a call to action on behalf of
event: “The Women’s World Award has taken
to the place where the idea was first conceived –
all people who are repressed against their will.“
the unique opportunity this time to address more
Vienna. Watch out for extensive coverage in the
Betancourt was kidnapped in 2002 by the
people than ever before.” The last event in New
next issue of FUTURE.
Columbian FARC and held captive for more than
York reached a potential audience of over 500
∫29
Aristotle, Hedge funds
and girls
WARNINGt
n does no
This colum
e opinion
represent th
, its
of Superfund
its pets
employees,
her living
or of any ot
being.
Larry Reno
The office in Sydney reflects Superfund’s philosophy: The spaciously designed offices
and glass elements create an open working and communication space.
Australia
In
some areas of the world, Superfund is a privately offered
investment fund. However in the US, Superfund is a regulated managed
futures fund offered to the public. We are not a hedge fund! But try
convincing anyone of that. It’s as hard as changing a dirty diaper on a
screaming baby.
Down under is on top
A
great deal is going
on in Australia. The
Superfund office in the
centre of Sydney officially
launched in February
with a cocktail event for
investors and customers
although
the
office
had been open since
September 2008. Seven
employees represent the
interests and products
of Superfund, above all,
the local product, Super
Alpha Fund 1 launched
on 3rd November 2008.
The target groupfor the
Super Alpha Fund 1 is high
net worth private individuals
and institutional investors.
Super Alpha Fund 1 is the
first of its kind in Australia.
Sometimes I feel like the Greek philosophers when they tried to
It invests in a broad range of
short-, medium- and longterm strategies, and has a
low degree of correlation
with bonds, equities and
securities.
convince old world scholars that the world was round. Even after
Aristotle endorsed the “round world” theory, many still wouldn’t believe
it. It’s often the same when it comes to managed futures. I can extol
their benefits, and list the difference between managed futures funds
and hedge funds until I’m out of breath and out of patience. And my
friends still respond, “You’re a hedge fund. I could lose all my money,
like my uncle Bob who lost his shirt trading corn.”
Matthias Gärtner, Managing
Director of the Super Alpha
Fund 1: “The fund offers an
ideal balance for a portfolio.
In good times, many investors
forget the fundamental
principle of diversification.”
This is a clear reference to
Harry Markowitz’ portfolio
theory. The four investments
on which the fund is based
cover various markets and
different
time
periods
to guarantee maximum
diversification.
Exasperated, I reply. “But we don’t trade in only one market. We trade
in over 100 markets worldwide, with strict stop loss limits. We’re also
highly regulated with full transparency and extensive risk management
procedures that are followed each and every day.” My friends just stare
and say, “You’re a hedge fund. I could lose all my money.” And so it
goes, in a never ending debate. “We’re a managed futures fund. You’re
a hedge fund. The world is round. The world is flat.”
Finally, I try one last time to make my point by using the bottom line,
hitting them where it hurts; their bank accounts. Smugly, I say, “Our
flagship fund has averaged over 18% per year since inception. And in
2008, when the stock market lost 40%, our funds performed very well
and yielded solid returns.” And they just stare at me, their lips sealed,
while their unbelieving eyes say it all, “You’re a hedge fund. I could lose
all my money.” Oh well. What can you do but keep trying? After all, I
understand there are still people who think the world is flat.
But what does all this have to do with girls? One of the perceptions
about hedge funds is that all of their managers are brilliant and most
extremely rich. Now that’s a perception I’m willing to let stand. After all,
to a potential date, what looks better? “I’m an aging, balding marketing
guy for a managed futures fund?” Or, “I’m a ‘senior’ member of a global
hedge fund?”
Hey, even us managed futures guys are pretty smart sometimes.
(Larry Reno’s opinion is solely his own opinion and does not represent
the opinion of Superfund or of any of its related companies.)
30∫ FUTURE | Harry Markowitz meets Christian Baha
High Noon in
San Diego
A
duel, but only of words. Two well-known financial experts met in a San Diego
television studio to hold an easy-going debate in relaxed surroundings.
Christian Baha, founder and owner of Superfund, met with no less than Nobel Prize
winner Professor Harry Markowitz, inventor of the timeless Modern Portfolio
Theory which continues to inspire key strategists in the financial world.
FUTURE: Professor Markowitz,
your portfolio theory was written
in 1952. Is it still relevant today?
precisely for what we want to
communicate to people: We rely on
a non-correlated and therefore stable
portfolio.
Harry Markowitz: Of course it is.
OK, it is over half a century old, and this
FUTURE: After 13 years of proven
could lead one to believe it is not modern
success for the Superfund trading
enough. But the system doesn’t change,
strategy, most investors understand
only the instruments and components
what this means.
into which you can invest
are new such as Superfund
Christian Baha: Managed
“Adding
funds or managed futures
futures funds have yet to be
managed
funds. In 1938, John
fully discovered. I estimate
futures can
Burr-Williams wrote that
it will take at least another
work in
risk is minimized if one
10 to 20 years for them to
any type of
diversifies sufficiently. This
become firmly established.
portfolio to
is true if you are referring
minimize
to independent, nonIt has yet to really sink in
overall risk.” with people that there is an
correlated
investments.
In 1952, I believed that
investment type that works
correlation should be taken
better than bonds or similar
into account.
instruments. Better performance, lower
risk, no correlation to other factors,
FUTURE: Christian Baha, the
a system that runs on its own, highly
Superfund
trading
strategies
liquid – where else can you find all of
are based on Harry Markowitz’s
these features?
findings. Why?
FUTURE: How do Superfund funds
Christian Baha: Because he stands
work in a portfolio?
Harry Markowitz: The degree of risk
of a portfolio does not only depend on
the risk of the individual factors, but also
and above all on when and how these rise
and fall. You need to look forward and
should not only look back at past price
trends.
Christian Baha: The good thing
about the model is that the computer is
independent of all predictions.
Harry Markowitz: Right. However,
you shouldn’t necessarily only look at the
computer.You could say: OK, in the past,
the performance was good on average.
Then consider if you would apply this
again to the future. The future is not as
certain as the past!
Christian Baha: This is an even stronger
argument in favor of managed futures
funds that use a trend following strategy.
The trading systems don’t attempt to
predict the future as many analysts try to
do. They simply follow trends.
Professor Harry Markowitz
Harry Markowitz won the Nobel Prize for Economic Sciences in 1952 for his legendary portfolio
theory. Today, his theory is the mainstay of all Superfund strategies. He spoke to Christian Baha in
San Diego. The result was a very interesting interview on the many aspects of managed futures, the
Superfund trading strategy and sound advice for investors.
32∫
In The
Limelight
#1 Slip of the tongue
I
f you can laugh at yourself, you have a sense
of humour. Which is universally appealing.
Superfund USA is currently running a threepart series of TV commercials in the US that aim
to provide information in an interesting way —
served with a large portion of humor.
In the USA,companies selling managed futures are
subject to a rigid set of legal conditions. For example,
you are not permitted to mention performance figures
and the products are not allowed to be explained –
essentially, not much more than the company name and
how to contact it are permitted.
The first three spots show how the commercial is being filmed.
Christian Baha delivers his lines about Superfund funds. A
heavily-accented, wrongly pronouced word throws the director
Even with such tight legal constraints, it is still
possible to produce effective advertising spots for a
strong product. Superfund USA took on this challenge
and positioned the founder and owner of Superfund,
Christian Baha, as the central focus of the spots, linking
him to the company name, the financial industry and the
investment class of managed futures.
off, due to his Austrian accent.
Director: “Christian, it’s investor, not inwestor!”
The first spot establishes the company as belonging to
Christian Baha. Viewers remember the slip of the tongue and
the resulting comical situation which form the starting point for
the second part of the series.
Watch the spots online:
www.superfund.com/tvspot
In the Limelight | FUTURE ∫33
t
#2 Passers-by
#3 Managed Futures
The follow-up spot shows that people remember this slip of
The third and final part of the trilogy picks up the thread of the
the tongue. On the street and in elevators, random passersby
second one. Once again, you see Christian Baha, but this time
approach Christian Baha to explain the fine difference: “It’s
in different everyday situations; walking in the park, reading a
in‘v’estor, not in‘w’estor.” Baha reacts to this advice with a wry
newspaper in a café or getting into a taxi.
smile.
All around him, people seem to be having the same
This spot refers back to the joke in the first spot to emphasize
conversation: “Have you thought about managed futures
the tie to the financial world. At the end, Christian Baha poses
yet?” This emphasises that the previous advertising spots are
the question: “Have you thought about managed futures yet?”
effective, as everyone is now talking about managed futures.
34∫ FUTURE | Superfund at the heart of europe
Markus Weigl
Superfund at
the heart of EUROPE
S
uperfund has been invited to play a significant role in a new EU Committeen.
Twenty-five European countries were screened to put forward one representative
business each to join the Expert Group on Financial Education. The chosen
companies were invited by the European Commission to find better ways of
explaining financial matters to the European population.
Born 28 February 1969 in
Vienna
Weigl has been on the
management board of
Superfund since the very
beginning, over 13 years
ago.
Superfund was invited
to join the new European
Union Committee after being
selected to represent Austria
from the financial sector. As
a result,Markus Weigl, the
Superfund representative, is
the only Austrian delegate in
the Expert Group. “We aim
to cooperate with domestic
financial institutions and
introduce their proposals and
input to the Expert Group,”
said Weigl, on describing
the role of Superfund as a
representative.
of work needed to be done
in Europe in this area.
Particularly in the current
economic climate, as now
more than ever, we need
to offer people in Europe
viable financial proposals
and solutions. Superfund has
always been a leader in this
respect, by highlighting one
possible path that can be taken
using risk diversification.
You only need to look at the
credit crisis or at the decline
of yen loans. People need
information here.”
The first meeting of this
25-member Expert Group
was held in Brussels on 7th
October 2008. “We accepted
this role because we believe
that there is a huge amount
Above all, young people
are encouraged to be more
actively involved in economic
matters. Lead countries in
this area are Great Britain,
and Ireland, which even
broadcasts its own advertising
spot on the subject.
The Expert Group on
Financial Education will meet
twice a year in the next three
years to present its findings
and recommendations to the
EU Commission. “Irrespective
of what we will be able
to achieve in this group,
Superfund will continue to
focus on financial education
as part of its core business
activities
by
organizing
events for sales partners and
customers as well as running
its own training program for
Superfund staff,” said Markus
Weigl, clearly demonstrating
his long-term commitment
to education.
∫35
Questions
to customers
Franz Bayer, Superfund investor from Vienna
T
he opinion of investors is important. FUTURE invited Franz Bayer, an investor from
important to me. The Superfund trading strategy
Vienna, to share his views on investment. Find out why Superfund is the investment of
has been able to deliver solid returns in both bad
choice for him.
stock market years and good ones – and so I
trust the strategy implicitly. As a general rule, I
Mr. Bayer, you have been investing in
in regulated markets. Superfund funds invest in
do not invest in funds that use short-selling and
Superfund funds for many years. Why did
more than 100 different highly liquid markets –
borrowed capital.
you choose Superfund in the first place?
petroleum and gold, but also wheat and cotton,
coffee and cocoa. This makes my portfolio much
Were you anxious when many hedge funds
I was looking for an investment that develops
more broadly diversified and all trading positions
ran into problems recently?
independently of stocks and bonds over the
are liquid at all times.
No. I have known Superfund funds for too
long term. And Superfund funds clearly met this
requirement.
Did Superfund funds continue to meet your
long for this to bother me. I am well aware that
expectations in 2008 as well?
Superfund funds are managed futures funds
What is the most important feature of an
investment for you?
and have nothing to do with traditional hedge
Absolutely. I’d say that was the case: probably
funds.
more than ever in 2008. Superfund funds
A clear strategy and a reliable fund manager.
achieved above-average performance which
What are your market expectations for
Superfund funds have both. The trend following
meant I avoided making losses in my overall
2009?
strategy makes sense because of the simple
portfolio. This was also the case in 2001 and
logic behind it: There have always been trends in
2002. So you could say that the “Superfund
The economy will not bounce back that fast and
markets and there will always be trends. Using
airbag” has come up trumps yet again in my
repercussions from this financial crisis will be felt
automated computer trading systems means I
portfolio.
on the stock markets for some time to come, as
well. Betting on rising prices is still too risky for
am confident that the strategy is executed in a
consistent and disciplined way.
What criteria do you use to select your
me personally, because I expect to see several
investments?
years of constantly fluctuating markets. This is
And what else?
I look for broad diversification and investment
why I would rather rely on Superfund funds in
I am actually rather a conservative investor. The
order to be able to profit from rising, as well as
long-term success of an investment is particularly
falling prices in the coming years.
www.superfund.com
LEGAL DISCLAIMER
The Superfund group of investment companies is a consortium of
affiliated entities that collectively provide the management, trading
advisory, sales and marketing services for the managed futures funds
that utilize the same Superfund brand systematic trend following
strategy (collectively referred to as the “Superfund Group”).
Performance:
Any performance results shown in this publication are net of all fees.
All details concerning performance figures of Superfund Q-AG (closed
fund) serve exclusively as a historical presentation of the ability of the
trading managers of the Superfund Group. No subscriptions or followup subscriptions are possible or will be accepted in these funds. Past
performance of any mentioned funds is not indicative of future returns
of any Superfund products.
General:
This publication serves solely as general information about certain
investment providers and investments and may not be construed as
investment advice. The information contained herein does not constitute
a solicitation or offer to invest in any financial products. The financial
products mentioned in this publication are only admitted for public sale
or may only be advertised publicly in certain jurisdictions, where they
are subject to strict regulations. As of the date of publication, certain
Superfund products are authorized or permitted to be sold publicly to
persons in the United States, Austria, Germany, Poland, Luxembourg,
Liechtenstein, Sweden, the Netherlands, Denmark and Japan, subject to
various conditions and limitations. Such products are not authorized for
sale to the general public in any other jurisdiction. Subscriptions from
persons or entities in other jurisdictions will not be accepted unless
such persons or entities fall under a specific exemption, or unless such
subscriptions are otherwise permitted in accordance with applicable
laws in those jurisdictions. No investment products are offered or sold
in any jurisdiction, or in any manner, in which an investment would
be contrary to the applicable securities laws or any other local laws
or regulations. Applications from persons who do not meet applicable
eligibility or suitability requirements will be refused.
Funds managed by members of the Superfund Group are not available
for subscription or purchase by persons resident in Hong Kong or
Singapore except under prescribed exemptions under the laws of
those jurisdictions. In Hong Kong, funds managed by members of the
Superfund Group are not authorized by the Securities and Futures
Commission. Only persons who qualify as professional investors
under the Securities and Futures Ordinance are eligible to apply for
shares of such funds. In Singapore, certain Superfund funds have
been recognised by the Monetary Authority of Singapore as restricted
schemes. Accordingly, only institutional investors, accredited investors
and other relevant persons (within the meaning of the Securities and
Futures Act of Singapore) may be offered, and are eligible to apply for,
shares of such funds. Any offer made to an accredited investor or other
relevant person in Singapore must be accompanied by an Information
Memorandum. For the list of restricted schemes, please contact your
Superfund representative. Otherwise, funds managed by members
of the Superfund Group not recognised by the Monetary Authority
of Singapore are available only to those who qualify as institutional
investors as defined under the laws of Singapore.
In Japan, only qualified institutional investors (as defined under the
laws of Japan) are eligible to apply for shares of funds managed by
members of the Superfund Group without solicitation in Japan pursuant
to an exemption and subject to resale restrictions. If any solicitation is
conducted within Japan, a filing with the Financial Services Authority
(FSA) is required before solicitation and other requirements for a private
placement to qualified individual investors must be satisfied. Absent the
same, no persons other than qualified institutional investors are eligible
to apply for shares of funds managed by members of the Superfund
Group which are not registered with the Director of Kanto Local Finance
Bureau of the Ministry of Finance.
Certain funds managed by members of the Superfund Group are
currently not licensed for public offer and distribution in Switzerland
and are therefore, subject to certain specific exemptions, not available
for purchase by persons domiciled or resident in Switzerland.
Superfund Financial (Middle East) Ltd. is regulated by the Dubai
Financial Services Authority (DFSA).
This document is strictly not intended for circulation to U.S. investors.
In the Unites States, Quadriga Superfund LP and Superfund Gold, L.P.
are registered with the Securities and Exchange Commission and is
available to certain U.S. investors that meet suitability requirements.
No other products managed by members of the Superfund Group are
available to U.S. investors.
In Australia this document is published by SuperAlphaFund Financial Pty
Ltd ACN 127 947 891 acting as an authorised representative of Columbus
Investment Services Limited ACN 106 064 644 AFSL 246943.
This information has been prepared without taking into account
anyone’s objectives, financial situation or needs so before acting on it
consider its appropriateness to your circumstances. Past performance
is not a reliable indicator of future performance.
In Australia investments can only be made by purchasing units in the
Super Alpha Fund 1 ARSN 127 228 719 (Fund). This document does not
constitute an offer to sell or the solicitation of an offer to buy units in
the Fund. Units may only be purchased by completing an application
form attached to the product disclosure statement for the Fund dated
6 April 2009 (PDS). All information contained in this document is
subject in its entirety to information contained in the PDS. If you are
considering investing in the units in the Fund you should consider the
Fund’s investment objectives, risks, charges and expenses carefully
before investing. This and other important information about the Fund
can be found in the PDS. You should carefully read all of the PDS before
making an investment decision.
All information contained herein has been compiled from external
and internal sources deemed reliable and is accurate to the best of
publisher’s knowledge. However, there is no guarantee as to the
complete accuracy of all printed information and figures, including
depictions. Estimations are based on opinions at the time of analysis.
Changes of these estimations are not required to be published. Any
liability for possible mistakes is hereby expressly excluded.
Important notice: Financial products managed by members of the
Superfund Group are speculative investments. There is a substantial risk
of loss in trading futures and options. Drawdowns ranging approximately
from 20% to 30% regarding strategy A (Superfund Q-AG, closed fund),
from 30% to 40% regarding strategy B and from 40% to 50% regarding
strategy C can occur regularly, and drawdowns surpassing these figures
are possible. The possibility of a complete loss of the principal invested
cannot be excluded.
THE AUTHOR AND DISTRIBUTORS OF THIS MATERIAL EXPRESSLY
DISCLAIM ANY AND ALL LIABILITY FOR ANY INACCURACIES CONTAINED
IN THIS DOCUMENT, AND SHALL NOT BE HELD LIABLE FOR THE SAME.