Tralucent Asset Management Inc. (“Tralucent”) launched the Tralucent Global Alternative (Long/Short) Equity Fund (“the Fund”) on March 31, 2020. The Fund became a public fund on October 11, 2023, and Class E units of the Fund began trading on the Toronto Stock Exchange on November 16, 2023.

Allow us to update you on our results:

	Mar 31, 2020 – Dec 31, 2020	2021	2022	2023	Jan 1, 2024- Sep 30, 2024	Total
Return from shorts	-0.07%	1.90%	7.95%	1.40%	-5.07%	5.81%
Return from long	40.73%	30.53%	-17.03%	24.51%	22.81%	122.32%
Total return of Tralucent Global Equity Fund (Class A)	38.18%	30.05%	-10.84%	23.85%	17.15%	132.16%
	Indices and popular ETFs
MSCI ACWI (in CAD)	32.68%	18.03%	-12.79%	19.33%	21.34%	97.77%

The above performance of the Fund is not a discrete event. It is a continuation of our solid performance over the past few decades.

Here is our composite performance from inception in September 2008:

Tralucent Composite to September 30, 2024, after ALL Fees
Last year	26.35%
Last three years	12.05%
Last five years	16.04%
Last ten years	13.64%
Since Inception Sept 30, 2008	13.21%
$100,000 since Sept 2008 has grown to:	$705,600.94

Critique on Current Period

The Fund has continued to enjoy solid performance over the past quarter, and year. Class A units of the Fund saw a 3.77% return over the past quarter, and a 25.19% return over the past year. Comparatively, the global market benchmark returned 5.35%, and 31.80% respectively.

This quarter, the Fund returned less than our global benchmark. While we saw our shorting activity break even, the long portfolio underperformed the benchmark. This underperformance can be attributed to large stock declines in holdings such as Humana and Dollar General, as well as the outperformance of utilities, which provided a robust addition to the returns in the underlying benchmark (the Fund does not hold utilities).

Quarters in which the benchmark outperforms the Fund should be expected and are likely to occur in the future as well. However, from a strategy perspective, we are convinced that it is more fiscally prudent in the long run to buy and hold growth companies as opposed to slow growing utilities. Tralucent has focused on investing in companies that are competitive, innovative, and control their own destiny, as opposed to companies that are driven by commodities. As such, the Fund’s overall performance was a function of individual companies versus sector performance.

This quarter highlights the importance of a very long-term view of investing. For example, the Fund has seen incredible returns from our NVIDIA holding in 2023 and 2024. However, the Fund has held NVIDIA since inception. On the short side, the same can be seen: in 2023 and 2024, Beyond Meat’s share price has declined significantly despite shorting Beyond Meat for many years prior.

Although we have underperformed this quarter, we have outperformed the global benchmark since inception in total return from both our stock picks on the long side, and on the short side.

We remain confident. The combination of long and short strategies is and has been very effective. This is best illustrated by the fact that the Fund was a top contender for two Canadian Hedge Fund Awards in October of 2023 in the equity focused category. One of these awards was the best three-year Sharpe ratio to June 30^th, 2023. Not only did the Fund have robust returns, but these returns are worth the periods of volatility that the Fund experiences.

The second quarter of 2024 has continued the trend of being quite eventful. Overall, these first few years since the launch of the Fund have been an incredible time to be in the market. We are very excited to see what the future years have in store for the Fund!

Outlook

Although the prices of equity investments have risen handsomely in the last ten years, the earnings yield of the equity markets are vastly superior to the prevailing yields in the fixed income markets during this period. We expect the equity markets to yield 7%-8% per annum over the next ten to thirty years. This is superior to the approximate 4% yield available on long term Treasury Bonds. Though the equity markets may not be as attractive as they once were, they are still certainly more attractive than the bond markets. We remind investors that over time, the equity markets significantly outperform other asset classes. Looking ahead to the next ten years, we have little reason to believe otherwise.

We must also weigh in on the future outlook for interest rates. It certainly is on a lot of minds. We firmly believe that the Fed hiking interest rates to combat rising inflation was a temporary measure. Through raising rates in 2022 and 2023, the Fed was able to successfully control inflation. Now we have seen the beginning of lowered interest rates. It is only a matter of time before it lowers rates some more. Lowered interest rates will provide fuel to an equity bull market.

Of course, there is the looming election that is top of mind for many. We remind investors that generally, it does not matter who is in the White House. Ultimately, we believe that regardless of who wins, equities will rise, and the future of earnings remains bright.

We would urge investors to remember that equity markets are not black boxes. Instead, they represent businesses run by millions of human beings that are continuously striving to be better and provide positive returns to their shareholders. It is this human aspiration to succeed which results in higher earnings of the underlying businesses and stock prices.

Tralucent and you:

We would be pleased to meet with you if you are interested in investing in the Fund or learning more about the Fund. Please feel free to contact us at general@tralucent.ca or at +1 (519) 835-7183.

Disclaimers:

Prior to October 11, 2023, the Fund was offered via offering memorandum only and the Fund was not a reporting issuer during such prior period. The expenses of the Fund would have been higher during such prior period had the Fund been subject to the additional regulatory requirements applicable to a reporting issuer. Tralucent has obtained exemptive relief on behalf of the Fund to permit the disclosure of the prior performance data for the Fund for the period prior to it becoming a reporting issuer.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Fund before investing. The indicated rates of return are the historical annual compounded total returns of the Fund including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.