Diamond Capital Management (Switzerland) Ltd.

Diamond Neutral Fund - April Update

Fund of Hedge Fund - Rationale
Our Fund of Hedge Fund provides a diversification from traditional bond and equity investments. We invest in a highly diversified portfolio of skilled managers and investment strategies on a global basis. The fund has an excellent track record since 2002 and significantly outperformed the HFRI FoF conservative Index since inception. It provided significant downside protection in market sell-offs such as in 2018, March 2020, 2022, while providing long-term capital appreciation.
Our Diamond Neutral fund constitutes of currently 13 managers, L/S Equity and Equity Neutral.  We believe in an environment where interest rates will stay higher for longer, dispersion will grow and hence continue to provide exceptional long and short opportunities for our managers.
Diamond Neutral - Monthly Review - April:
The Diamond Neutral Fund USD Class A1 was down -0.26% in April and is up +4.64% year-to-date.
Market sentiment shifted to risk-off for most equity markets as the prospects of rate cuts was pushed further out. Disappointing US inflation data which came higher than expected was the main reason, and it raised concerns that the Fed might not cut rates in 2024. Developed markets underperformed Emerging ones with the MSCI World losing -3.9% and the MSCI EM raising +0.3%. The S&P 500 TR fell -4.1%, the European Stoxx 600 -0.9%, and MSCI China gained +6.4% as investors became more constructive on China.
The portfolio protected capital well as all strategies were positive except for Long Short. Market Neutral was our best performing strategy with most managers being up. Our best performer in this category and across the board was once again a US healthcare services and insurance focused manager. Performance was generated being short healthcare insurance companies which were affected by a regulatory catalyst which the manager correctly predicted. The laggard in this category was European Small-Mid cap technology focused manager who was modestly down. Credit strategies also contributed positively to performance and this across the municipal bond strategy and recently added real estate-backed loans strategy. This is a manager we know extremely well, have high conviction in and who generates high risk adjusted returns. Lastly, Long Short was the sole negative strategy and a US activist manager detracted the most. This came as no surprise as his activism generates a lot of value, but he still has some sensitivity to US equity small caps which sold off sharply during the month (Russell 2000 fell -7.1%).