BK Opportunities Fund 7 - Crystal Fund

BK Opportunities Fund 7

Investors Report | April 2022

New Variant

Since the Omicron variant was classified as a Variant of Concern in late November, rattling markets and causing some volatility, better news came providing some perspective about a way out of the pandemic. Some market optimism leads many economic players to plan for the postpandemic world. In this context, the most critical metric for central banks is inflation.

Fed & Inflation

US inflation is more significant than expected as it went up to 7.0% in 2021 from 5.4% (this is the most robust inflation number in nearly 40 years), leading Fed Chair Jerome Powell to probably raise the interest rate to multiple times in 2022. Certain market players even expect 7 hikes during the year. This rate hike is splitting markets between the one agreeing the economy needs to be tame, with the one believing this might be too early and could stop the recovery. Who Biden will appoint to the three open seats at the Fed board and how large the Omicron variant on the US economy will significantly affect rates. The Omicron disruption on stock markets created significant volatility, but levels remained stable during the last quarter.

Corporate Markets:
resilient & strong

2021 was full of dramatic events related to Covid‐19 and market reactions, but it was also a year of solid returns S&P 500 yielded 26.9%, and S&P/LSTA Leverage Loan Index yielded 5.2%. Throughout 2021, Companies’ report of their financial results has almost systematically exceed the anticiption. Under such credit benign environment, Companies are valued based of a very low level of risk (reflected by the low or quasi null interest rate used to actualize cashflows in the valua  on of a Company). We note that BK Opp. Fund‐4 significantly outperformed the leverage loan market with a 17.1% return over the year 2021.

Corporate Loans
Update & activity

2021 was full of drama  c events related to Covid‐19 and market reactions, but it was also a year of solid returns S&P 500 yielded 26.9%, and S&P/LSTA Leverage Loan Index yielded 5.2%. Throughout 2021, Companies’ report of their financial results has almost systema  cally exceed the anticiption. Under such credit benign environment, Companies are valued based of a very low level of risk (reflected by the low or quasi null interest rate used to actualize cashflows in the valua  on of a Company). We note that BK Opp. Fund‐4 significantly outperformed the leverage loan market with a 17.1% return over the year 2021.

BK Opp. Fund 4
Performances

BK Opp. Fund‐4 is making a distribu  on of 2.00% ($20.00 per share) this quarter (payments are being wired on the 31st January 2022), bringing the total distribu  on since inception at 54.00% ($540.00 per share) non‐annualized. The cumulative return as of 31st December 2021, which blends distribution and NAV profits is +22.2%. Based on weighted average internal rate of return (IRR) of all classes since incep  on at their respec  ve entry price, BK Opp. Fund 4 annual return is +5.6% (all returns are net). As we are now focusing on monetizing our positions, we believe the fund’s performance should increase in the coming quarters.

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This is not for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to law or regulation. The information contained herein is for information only and does not constitute an offer regarding any product. The document has been prepared by Oristan Ireland DAC and the data have not been audited nor verified. Past performance cannot indicate future performance. There is no assurance that the investment objective will be achieved and investment results may vary.
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