Most recently, the failures of Silicon Valley Bank and Signature Bank, along with the emergency takeover of Credit Suisse by UBS, have raised concerns about a potential banking crisis, leading to high volatility in financial stocks. The Federal Reserve recently increased its rate for the ninth time since March 2022 to 4.75–5.00% (from 0% before), but indicates that the cycle of rate hikes may be nearing an end (and the market currently expects rates to remain unchanged and prices in a rate cut in the later part of the year, according to CME FedWatch Tool). The headline inflation rate in the US declined to 6.0% in February (down from its peak of 9.1% in June 2022), although it remains elevated compared to 1.4% in January 2021. As we enter 2023, most of these issues, although easing slightly, remain very much in place. The investment environment in 2022 was deeply challenging, with supply chain disruptions, increasing inflation and rising political tensions. In this report, market data are derived from Refinitiv and company data are provided by Tetragon (unless otherwise specified). At end-February 2023, net gearing was 7%, while historically Tetragon has retained a significant part of its portfolio in cash. ![]() In 2022, Tetragon invested US$383m (or 13% of opening NAV), tapping into its revolving credit facility (US$115m drawn at end-December 2022 of US$400m available). ![]() Tetragon continues the expansion of TFG Asset Management, investing in both the asset managers and the funds managed by them and, as at end-December 2022, effectively 85% of Tetragon’s portfolio was either invested in or managed by TFG Asset Management. In 2022 Tetragon’s investments in CLOs and private equity (PE) also performed well (1.7pp and 1.6pp contribution to NAV, respectively), which was mostly offset by its exposure to publicly traded biotech and tech stocks. TFG Asset Management was Tetragon’s largest value driver in 2022 (adding 4.4pp to Tetragon’s NAV development) for the sixth consecutive year and remains its largest holding, representing 48% of NAV at end-February 2023.
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