Brummer Multi-Strategy monthly commentary April 2022
Brummer Multi-Strategy (BMS) SEK and Brummer Multi-Strategy 2xL (BMS 2xL) SEK posted an estimated return of 2.7 and 5.1 per cent respectively in April (2.7 and 5.2 per cent for the corresponding USD classes).
MARKETS
Inflation in the eurozone reached new highs in April while US inflation numbers remained at a 40-year peak. Russia’s invasion of Ukraine and lingering effects of the pandemic have driven energy and food prices higher while pushing growth expectations lower. Both the IMF and World Bank downgraded their forecasts for global economic growth, with surging prices and rising interest rates creating a particularly difficult environment for several emerging market economies. The Federal Reserve as well as many other central banks signalled potentially more aggressive rate hikes in the near future. Global equity markets moved lower in April digesting first quarter earnings, hawkish rhetoric from central banks and lockdowns in China. The S&P 500 and Nasdaq both finished the month down close to -10 per cent. In commodities, oil price volatility remained at heightened levels while gas prices moved higher mainly impacted by geopolitical tensions and demand concerns from China. In fixed income markets, yields generally moved higher as central banks move to tighten monetary policy in the face of soaring inflation. In FX, the US dollar index appreciated and ended the month at its highest level since 2002 as markets priced in aggressive rate hikes in the US while weaker economic data and global growth outlook weighed on the euro, pound, and yen.
STRATEGIES WITHIN BRUMMER MULTI-STRATEGY
April was another strong month for BMS, largely positive across investment strategies. Trend following strategies continued to perform very well. Developed market trend following generated gains across asset classes, with fixed income positioning particularly profitable but the strategy also saw meaningful gains in commodity and currency markets. Exotic market trend following delivered positive returns driven by gains in fixed income, commodities and power markets. Despite a difficult month for equity markets, long/short equity strategies also performed very well during the month with solid alpha generation across TMT, financials and industrials sub-sectors. Systematic equity investing was essentially flat for the month. The only negative contributor to BMS’s performance in April was discretionary macro, where gains in currencies and fixed income were more than offset by losses in equities.
As of May 1st, the portfolio managers marginally increased the allocation to long/short equity strategies, including an allocation to the previously announced new portfolio manager pod (PM Pod) managing a long/short equity strategy focusing on companies affected by technological advancements in the Nordics and Europe. The portfolio managers at the same time decreased the allocation to systematic equities and trend following strategies.
For more information on Brummer Multi-Strategy's performance, please see the tables and graphs below.
