William Edwards
4 min read
-
Nouriel Roubini's America Atlas Fund has outperformed amid market volatility and inflation risks.
-
Roubini's fund launched in November 2024 and is up 4%.
-
The fund has heavy allocations to short-term Treasurys and gold.
On a cold night in December, Nouriel Roubini stood in a dark room at Bloomberg's Manhattan headquarters and prophesied a menacing future for financial markets.
Yields on 10-year Treasurys would soar to 8% thanks to persistent inflation, he said at Bloomberg's ETFs in Depth conference. That would send the S&P 500 and Nasdaq plummeting.
The scene was perfectly on brand for the famously bearish economist widely known as Dr. Doom. That's why it might have been easy to dismiss his gloomy proclamations. Perhaps even more of a reason to discount Roubini's warnings was that he had just launched an ETF, the America Atlas Fund (USAF), meant to act as an alternative to the fixed-income segment of the traditional 60/40 portfolio. A cynical listener could have interpreted his speech as a pitch to buy his product because stocks and bonds would perform poorly.
But six months later, the evidence is irrefutable: Roubini has nailed his opening act as a fund manager.
Since USAF's launch in November, the S&P 500 is flat, suffering a violent 20% drawdown in the interim. Long-end Treasurys have also been volatile, and have sold off in tandem with stocks. Many of the driving forces behind those moves have been those inflation risks that Roubini warned of, including tariffs and restoring, and government spending.
Meanwhile, USAF is up 4% and fell only 2% during the market's "Liberation Day" tantrum when stocks tanked and bond yields spiked. The fund has been volatility-resistant thanks to its heavy allocations to short-end Treasurys (about 50% of the portfolio) and gold (19%). The remaining holdings are a mix of commodities, REITs, and TIPS, and alternative investments.
In other words, Roubini's timing couldn't have been better, and his warnings — at least directionally speaking — have been spot on.
It's been a dream start for the New York University professor, who often gets flak for his regular pessimism.
"Sometimes people say, 'You talk about stuff, but talk is cheap,'" Roubini told BI. "'Put your money where your mouth is. Have some skin in the game.'"
The 67-year-old Roubini, who is most known for predicting the 2008 financial crisis, could have simply kept on with his work at NYU and continued pontificating about where the economy was headed.
