Insight: How This Fund Tripled The Return of the S&P 500 (Since May 2020)
Nice looking chart you got there. How’d you do it?
Hedonova: “Alternative investments.”
Thanks to investments in litigation financing, real estate, startups and other alternatives — Hedonova has outperformed the S&P 500 by more than three times.
Here’s how they’ve performed vs. the benchmark S&P 500 (as of May 2023):
- S&P 500: 8.8% Internal Rate of Return (IRR).
- Hedonova: An impressive 29% IRR.
Since launch in 2020, their fund has grown to over $92M in assets under management, with minimum investments starting at $10K.
Let’s answer the big questions:  How to fit alternatives into your portfolio and  What to invest in.
1. Modern portfolio: 0% → 30% alternatives
Last week, Picton Mahoney Asset Management’s head of portfolio construction suggested the following:
- Going from: 60% stock and 40% bonds portfolio.
- Moving to: 40% stocks, 30% bonds and 30% “alternative strategies.”
Here’s why: In an inflation shock, stocks and bonds tend to move in the same direction — while adding “alternatives” can help diversify.
- Uncorrelated to the S&P 500: Alternatives can generate positive returns even during a challenging market.
- Diversification: This approach enables investors to benefit from the growth and returns of multiple industries.
And with the 60/40 split, “you’re missing entire asset classes and strategies,” — which have generated tremendous returns for decades.
2. “Mutual fund for alternatives”
Hedonova is one of the simplest ways to access alternative investments. One investment in their fund gives you exposure to nearly a dozen alternative asset classes.
- Their mobile app makes it easy to track your performance along with detailed quarterly reports. Open an account →
- Hedonova’s portfolio is managed by seasoned investors who previously held positions at Morgan Stanley and Millennium Partners:
Discover: See their updated portfolio breakdown.
Going deeper: Despite the market downturn, Hedonova has been able to beat the market with investments like:
1/ Litigation financing: This has become one of the hottest investments in recent years. Hedonova finances commercial lawsuits and gets a share of the settlement money.
- Track record: Hedonova has generated an annualized 56.8% return in this asset class.
2/ Startups: They specialize in pre-IPO startups — giving investors access to unicorn startups (>$1B valuation) that are typically available only to venture capitalists and institutional investors.
- Startup portfolio includes: SpaceX, Flexport, and Sila Nanotechnologies.
3/ Equipment financing: Hedonova has specialized in leasing medical equipment to hospitals (i.e., MRI machines, robotic surgical arms), focusing on the Asian healthcare sector as a strong growth area.
- This generates a steady stream of monthly payments — with a low default rate and short payback period (10 months).
- These investments can also profit from tax benefits and government subsidies.