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A mixed year for Tetragon Financial

Tetragon Financial Group TFG

Tetragon Financial (TFG) has published its annual report for the year ended 31 December 2020, which shows it was a bit of mixed year for the company. During the year, it has provided NAV and share price total returns of 9.5% and -18.5% respectively. In comparison, TFG’s hurdle (LIBOR + 2.75%) returned 3.7%, the MSCI ACWI returned 16.8% and the All-Share returned -9.7%.

[QD comment: the LIBOR + 2.75% hurdle doesn’t appear to be that much of a target to clear. The global equity index is arguably a more relevant benchmark and, while TFG has provided an NAV total return that is almost double digits, its performance is still somewhat behind global equities, as represented by the MSCI ACWI.]

2020 performance gains and losses

Four of the portfolio’s asset classes produced performance gains for the year with two producing losses. Nearly 60% of the portfolio’s gains were generated within TFG Asset Management (which holds private equity investments in asset management companies). The company’s allocation to private equity and venture capital also delivered strong returns, generating over 20% of the company’s gains. Remaining gains were within the portfolio’s investments in event-driven equities, convertible bonds, and other equities and credit. The company’s allocations to bank loans (via CLOs) and real estate generated small losses during the year.

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