Horizon Kinetics, a $7 billion hedge fund, is counting on real estate and cryptocurrencies to shield its investors from increasing inflation. Horizon Kinetics, led by veteran managers Murray Stahl, Steven Bregman, and Peter Doyle, has three of the top ten performing mutual funds this year.
The fast growth in debt levels over the last decade, fueled by governments massive budgetary responses in the aftermath of the pandemic, has prompted investors to attempt to inflation-proof their portfolios.
This includes holding a diverse portfolio of commodities, real estate, cryptocurrencies, and high-quality businesses with sound business strategies. Horizon Kinetic’s top-performing funds have a lot of real estate in their portfolios. Peter Doyle told the Financial Times that,
There is no turning back after the pandemic and globally there is a debt problem and it means either default or currency debasement
Horizon’s Paradigm fund invested 1% of its portfolio in Grayscale’s Bitcoin Trust in 2016, and the investment is currently worth 10% of the fund’s total assets. Kinetic holds 5.1 million GBTC over four different portfolio offerings. Horizon Kinetics has three of the top ten performing mutual funds so far in 2021.
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The firm’s top-performing funds have benefitted from long-term investments in landowners and real estate developers across North America, including Texas Pacific Land, Dream Unlimited, and Brookfield Asset Management, in addition to its crypto allocation.
Doyle further stated that people should have exposure to the asset class, pointing out that bitcoin supply is restricted and has a scarcity premium at a time when people are worried about currencies losing value. Despite the recent drop in cryptocurrency prices, the asset management expects three of its products to do well in 2021. In 2021, Kinetics Spin-off, Corporate Restructuring, and Small Cap Opportunities funds saw returns of more than 50%.
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