The last quarter saw our hedge fund deliver on one of its primary roles: preserving our investors’ capital. All the traditional asset classes once again posted negative returns in the third quarter, although the declines were less dramatic than in the first two quarters of the year. The Amethyst Arbitrage Fund produced a good positive return in the third quarter due to its diverse range of non-directional arbitrage strategies.
This was also the case in the first quarter. But it should be recalled that in the second quarter, the central banks admitted that they had underestimated the inflationary risks. This sent bond prices into a rarely seen downward spiral that forced us to chalk up some significant losses. We were confident that we could recover from much of that drop, given the nature of our arbitrage strategies, and this is what transpired. Much of the ground lost has now been regained. Although 2022 will probably be remembered for the losses incurred by many investors, we are confident that, in the end, the Fund will post positive results. Here follows a discussion of what happened in the third quarter, along with a sense of what the last quarter of the year may bring.