Rate Hike Volatility: Winter Comes in June for Crypto Laureola Advisors 22 June 2022 The S&P 500 was flat in May but at the time of writing is down 5.8% in June and -22.9% ytd. Most financial assets are down negative double digits ytd: Nasdaq -31%, 10-year US Treasuries -15%, and Bitcoin -56%. The growing volatility and uncertainty in the financial markets globally is being driven in large part by the overdue and somewhat chaotic reaction of Central Banks to persistent inflation. The US Fed hiked rates by 75 bps in June - the largest hike in 27 years. The 10-year US real yields soared 150 bps in 60 days and most other bond markets suffered - the Australian 10-year yield rose 57 bps in 2 days. The persistent inflation, made worse by supply chain problems from lockdowns in China and war in the Ukraine, is starting to bite consumer spending and reduce economic growth around the world. In Europe, the 80% rise in the price of natural gas is one problem; the 50% reduction in deliveries by Russia is a worse problem. Europe may not be able to buy all the gas they need for next winter at any price. Investors fearing more volatility may want to raise cash to be "safe". But if cash buys 8% fewer goods and services next year compared to this year, too much cash may not be safe. A well-managed Life Settlements strategy can contribute to investors' portfolios in these turbulent times: it will be non-correlated with the equity and bond market turmoil, and it offers a return that has a strong probability of keeping up with inflation. PORTFOLIO CONSTRUCTION: THE ROLE OF LIFE SETTLEMENTS - The Role of the Laureola Fund in Portfolios of Private Clients and Family Offices Last month we discussed the role of LS in institutional portfolios showing that, mathematically, a small allocation to LS could both reduce portfolio volatility (risk) and increase returns over most 5-year periods because of its diversification characteristics, even if single digits returns are assumed. But there are other definitions of investment risk sometimes used by Private Clients and Family Offices. Some are simple and straightforward, but still very useful in analysis - maybe even more useful. Many strategies that promise diversification in bull markets fail to deliver the needed diversification in bear markets. But the Laureola Fund does. The Fund has outperformed all asset classes (except for commodities) ytd in 2022 including hedge funds as measured by the Barclay HF index (-5.7% ytd). The Fund has delivered positive returns in 7 of the 10 worst months for the S&P since inception, and in 2 of the 3 months when both had negative returns the negative return of the Fund was insignificant. The Fund has helped investors keep up with inflation delivering 6.7% net over the past 3 years. For once the theory and the practice align: The Laureola Fund can make a positive contribution to investors' portfolios in turbulent times no matter what analysis is used. Funds operated by this manager: Laureola Australian Feeder Fund

Investment environment snapshot Laureola Advisors June 2022 The S&P declined 8.8% in April and by late May was down over 12% ytd. The Nasdaq was down 22% ytd. and Bitcoin down 38% ytd. The 10 yr Treasury finished at 2.9%; the yield has doubled in 18 mos. Concern is growing that the US Fed may be making serious policy mistakes by being weak on fighting inflation and focusing on supporting equity prices. The Fed may have to choose between two evils, both with significant negative effects. The respected economist Mr. El Erian has been vocal on this issue: "I think the Fed is going to have to decide between two policy mistakes ...". Rising rates won't help an economy already showing signs of weakness: new home sales were down 16.6% and business owners are increasingly pessimistic. The geo-political backdrop worsens as Russia and China appear to be allying more closely both economically and militarily. China has chartered 10 extra tankers in May alone to transport Russian oil and the two countries did a joint exercise flying strategic bombers over the Sea of Japan during President Biden's recent visit to Tokyo. Wheat shortages in Egypt (80% of her wheat comes from Ukraine and Russia) recently caused a riot in the streets as the subsidized bakery had no bread. The need for diversification in portfolios is greater now than ever and Life Settlements can provide the required stable, non-correlated returns even in this uncertain world. Funds operated by this manager: Laureola Australian Feeder Fund

Report Date	24 June 2022
Manager	Laureola Advisors
Fund Name	Laureola Australia Feeder Fund
Strategy	Life Settlements
Latest Return Date	May 2022
Latest Return	-0.35%
Latest 6 Months	-1.66%
Latest 12 Months	2.74%
Latest 24 Months (pa)	5.13%
Annualised Since Inception	14.15%
Inception Date	01 May 2013
FUM (millions)	US$57
Fund Overview	The Laureola Investment Fund's strategy is to provide investors with exposure to the returns of life settlements in a risk mitigated manner. Life Settlements are resold life insurance policies and can be thought of as a form of finance extended to an individual backed by the person's life insurance policy. This financing is repaid upon maturity by collecting the death benefit from the insurance company. Risk mitigation measures implemented by Laureola include science-driven due diligence of policies, active monitoring of insured through a vertically integrated operation, and investor aligned fund design.
Manager Comments	The Laureola Master Fund returned -0.35% in May, an outperformance of +0.54% compared with the Bloomberg AusBond Composite 0+ Yr Index which fell by -0.89%. The Laureola Master Fund has a track record of 9 years and 1 month and has outperformed the Bloomberg AusBond Composite 0+ Yr Index since inception in May 2013, providing investors with an annualised return of 14.15% compared with the index's return of 2.58% over the same period. On a calendar year basis, the fund hasn't experienced any negative annual returns in the 9 years and 1 month since its inception. Over the past 12 months, the fund's largest drawdown was -2.39% vs the index's -10.81%, and since inception in May 2013 the fund's largest drawdown was -4.9% vs the index's maximum drawdown over the same period of -11.09%. The fund's maximum drawdown began in December 2018 and lasted 10 months, reaching its lowest point during December 2018. The fund had completely recovered its losses by October 2019. During this period, the index's maximum drawdown was -0.98%. The Manager has delivered these returns with 1.83% more volatility than the index, contributing to a Sharpe ratio which has only fallen below 1 once over the past five years and which currently sits at 2.25 since inception. The fund has provided positive monthly returns 97% of the time in rising markets and 89% of the time during periods of market decline, contributing to an up-capture ratio since inception of 160% and a down-capture ratio of -189%.
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