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Intalcon Alpha for Impact Global Fund. Outperformance for a better world.

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"Within the framework of the German Sustainable Finance Strategy, the financial sector should contribute to financial market stability and finance the real economic activities necessary to achieve the United Nations Sustainable Development Goals and the goals of the Paris Climate Agreement", says the Sustainable Finance Advisory Council of the German Federal Government on its website [1]. But how is this to be done? Which measures will achieve an effective and measurable contribution and pay into the SDGs?


The discussions around this seem endless and has so far only led to a very limited number of satisfactory outcomes and product offerings. Moreover, the discussion focuses heavily on the "E" in ESG. A study by Finanzwende Recherche [2] on "sustainable" equity funds available in Germany shows that, overall, their investments hardly differ from those of conventional funds.

There is also disagreement in the assessment of equities with regard to their ESG contribution. While Standard & Poor's excluded Tesla from its ESG index a few days ago but left Exxon Mobil in the index, the ESG rating of the rating competitor MSCI is more positive for Tesla than for Exxon Mobil.

ESG ratings for Tesla
Figure 1) ESG ratings for Tesla and Exxon Mobil
MSCI gives Tesla a better ESG rating than its rating competitor Standard & Poors, which recently excluded Tesla from its S&P 500 ESG index. [3]

Nor do we see the EU policy of classifying natural gas and nuclear power as sustainable economic activities under the EU taxonomy as having any positive effect on achieving sustainability goals. Topsy-turvy world? All in all, current efforts to solve the most pressing environmental and social problems are insufficient.

"We don't have time" is the title of what is claimed to be the world's largest digital platform for climate solutions [4], founded by the "Greta Thunberg discoverer", Ingmar Rentzhog. That is precisely the problem. Time is money, and the more time that passes, the more expensive the global damage is for everyone (taxpayers).


While there is still much debate, we at Intalcon have asked ourselves what our contribution to solving environmental and social challenges could be. The premise here was that our contribution must have an immediate and direct impact. That is why we founded Intalcon and the Intalcon Foundation and started to implement our mission "Alpha for Impact".

On the one hand, it is about managing liquid investments such as equities and bonds more efficiently in order to achieve an above-average return - a so-called outperformance; also called "alpha" in technical terms. Fund managers and asset managers very rarely achieve above-average returns. Less than 2 out of 10 actively managed funds are able to outperform over a period of 10 years. Over 5 years, the figure is still only 4 out of 10. [5]

Figure 2) Europe equity fund (under)performance
Less than 2 out of 10 actively managed funds in Europe are better than average. Incidentally, the same is true for the USA. [5]

On the other hand, it is about directly supporting sustainable projects with a part of the above-average return from asset management (performance fee and management fee) and so immediately generating an effect (impact).

This is precisely our contribution: to generate the impact on SGDs that is so urgently needed from a portion of the alpha generated. To promote projects that combat global warming, that aim to protect species and promote biodiversity, and projects that secure social peace and help reduce inequalities. These are our goals at Mission Alpha for Impact.

A large part of the performance fee and the management fee is channelled via the non-profit Intalcon Foundation into environmental and social projects.


One of the building blocks of this mission is the "Intalcon Alpha for Impact Global Fund". An algo-backed impact fund, exclusively for professional investors. The fund is broadly diversified across several asset classes such as equities, bonds, precious metals and commodities. It features stable returns thanks to its mix of uncorrelated strategies, including equity long/short, macro and opportunistic strategies, short-selling and multi-strategy approaches. Trading relies on a mix of discretionary decisions and computerised algorithms.

The fund has been privately traded for over 10 years as the GAP Global Opportunity Fund (GAP) and currently has assets under management (AUM) of around €7.5 million (as of 30 May 2022).

Intalcon Alpha for Impact Global Fund - performance vs benchmarks
Figure 3) Intalcon Alpha for Impact Global Fund vs. benchmarks
Intalcon Alpha for Impact Global Fund [6]. Comparison of performance with equity, bond and commodity indices. As of 31 May 2022.

The strategies used in the fund have significantly outperformed well-known equity, bond and commodity indices (MSCI World, WGBI and S&P GSCI Commodities) over the past three and five years, respectively, with an average gain of around 54% and 38% per year. This year (2022), too, the fund is already up by over 40% - despite an adverse stock market environment.


A look at the development since the beginning of the year shows the advantages of the combination of stock selection and active market timing: Despite the historically weak start to the year on the equity and bond markets, the Intalcon Alpha for Impact Global Fund had already generated a return of 44.3% by the end of May. The fund thus once again lived up to our claim of generating attractive returns independent of the prevailing market situation (absolute return).

At around 29%, the equity portfolio (with a focus on the USA) contributed the largest share to this year's performance in the first five months. This return is mainly due to the short exposure in various equity indices such as the S&P 500, Nasdaq 100 and the Euro Stoxx 50. Incidentally, the equity portfolio has a minimum allocation of 51% of the fund's assets at all times. Commodity futures trading provided around 7%, while the remaining share of over 8% is attributable to positive currency effects.


What is special about the fund is that a large part of the performance fee and the management fee is channelled via the non-profit Intalcon Foundation into environmental and social projects that contribute to mitigating temperature increases, protecting species and improving living conditions in low-income countries.
The fund thus proves that above-average returns can be achieved while at the same time making a real and meaningful impact in the sense of the United Nations' Sustainable Development Goals; and it does so with high liquidity and low drawdown.


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