An emerging investment manager and university lecturer, Fabio Dias has become a known figure in the UK’s financial sector, serving as the CEO and main investment manager of Stalwart Holdings, a company recognised for its sophisticated investment strategies and innovative financial products. Despite his strong reputation and extensive experience, Dias faced difficulties navigating the challenging market conditions of last August, leading to a performance that fell short of expectations.
Stalwart Holdings has garnered attention for its issuance of Exchange-Traded Notes (ETNs) through a special purpose vehicle without any banking intermediation, with Dias spearheading the listing process on the Vienna Stock Exchange. These ETNs have attracted investor interest due to their transparent pricing and low fees, managed by an algorithmic system that Dias has often promoted as cutting-edge.
However, August proved to be a challenging month for Stalwart Holdings. According to prices published on the Vienna Stock Exchange website, the ETNs issued by the company returned -0.62% during the month. This performance stands in stark contrast to the broader financial landscape, where global stock markets ended the month on a positive note, most multi-strategy hedge funds posted gains, and the average balanced portfolio in the UK saw a 0.3% increase, as indicated by the PIMFA Private Investor Balanced Index.
The underperformance of Stalwart Holdings’ ETNs in August has been attributed to a combination of challenging market conditions and smaller strategic missteps, as detailed in investor documents released by the company. A key factor identified was the unexpected strength of the British Pound during the month. This currency appreciation posed significant challenges for Stalwart Holdings, particularly because the company holds substantial exposures to US markets. The stronger Pound effectively diminished the value of these US investments when converted back to Sterling, leading to a drag on overall returns.
In addition to the currency impact, the company’s algorithmic trading strategy, which has been developed by Dias as part of his academic research and has been a hallmark of Stalwart Holdings’ approach, also contributed to the disappointing performance. According to the investor documents, a few poorly timed trades were executed by the algorithm, exacerbating the losses incurred during the month.
While this algorithm is lauded by Dias for its ability to capitalize on market opportunities, in this instance, it appears to have misjudged the extreme market movements that happened in August, leading to further underperformance. These factors combined to create a month where the ETNs lagged behind broader market trends, disappointing investors who had come to expect more resilient returns.
Interestingly, in a recent social media post addressed to the followers of Stalwart Holdings, the company chose not to address the disappointing August performance. Instead, the regular update that the company gives to its follower base focused on outlining their ambitious plans for 2025, leaving followers to parse the implications of the recent downturn on their own.
Despite the setback in August, it is worth noting that Stalwart Holdings’ ETNs remain up by 10.3% year to date as of the end of August 2024. While the recent performance may have raised some concerns, the ETNs’ overall performance this year suggests that the company’s strategies, though sometimes volatile, can continue to deliver strong results in the long run.
