Brummer Multi-Strategy monthly commentary December 2025

Markets

The final month of the year delivered several notable market developments as themes that characterised much of 2025 once again came to the fore. In US equity markets, investors anticipated a seasonal rally following a strong year. Early price action appeared to support this narrative, driven mostly by large-cap technology names. Sentiment deteriorated mid-month, however, as investors grew weary over increasing capital expenditures and lower profit margins in the AI space, sparking a significant sell-off. The steep drop was mostly recouped amid lower inflation data and interest rate cuts, leaving major US indices such as the S&P 500 and Nasdaq 100 broadly flat for the month.

In Europe, the Santa rally was more palpable with both mainland European and UK equity markets outperforming. This was mainly driven by the exceptionally strong banking sector with investors lauding the sector’s limited AI exposure, strong capital positions, and higher interest rate margins when compared to their US peers. Asian equity markets were more mixed: Japanese equities experienced heightened volatility but ultimately ended the month flat in the wake of rate hikes, the AI sell-off and yen movements. Chinese equities had a weaker month weighed down by deflationary producer prices amid increasingly weak demand.

Bond markets showed notable regional divergence. US Treasury yields were volatile over the month,  while in mainland Europe, Bund yields rose as investors anticipate no more cuts from the ECB, possibly even a hike. The yield on UK gilts moved lower for the month as the Bank of England delivered a rate cut along with inflation coming in lower than anticipated. In Japan, yields rose in line with the Bank of Japan raising rates, although real rates remain negative. In FX markets, the dollar weakened against most currencies as expectations of a lower-rate environment in the US gained traction.

In commodity markets, crude oil prices moved lower in line with expectations of oversupply and a possible ceasefire in Ukraine. Natural gas prices fell sharply, over 23 per cent, due to unusually warm weather which significantly drove down demand. Among other commodities, investors continued to flock to precious metals as a safe haven asset with silver rallying sharply, capping off a year in which the metal’s futures price more than doubled in value.

Brummer Multi-Strategy

In December, the long/short equity bucket was the largest contributor to performance, with alpha generated across a broad range of sectors. Within US TMT, strong gains were driven by positions in software & services, consumer services and technology hardware. Detracting sub-sectors included commercial services, real estate management and media & entertainment. In global healthcare, profitable positioning in pharmaceuticals & biotechnology and healthcare equipment led to significant gains which were lightly offset by consumer wearables. European financials also contributed positively, with profits generated from positions in mainland European banks, partially offset by some names in financial services and insurance. Listed real estate detracted somewhat as unprofitable positions in Europe and the UK outweighed gains in Canadian real estate.

Systematic trend-following also contributed positively to performance this month, with performance driven by both developed and alternative markets. In developed markets, positioning in commodities such as silver and copper along with Asian and European equity indices proved profitable. This was partly offset by losses from some positions in FX and fixed income. In alternative markets, gains from credit positioning were offset by losses in FX and commodities.

Systematic Fixed Income saw gains realised as profits in US treasury bonds and Korean bonds were offset by minor losses in EU and Japanese bonds.

Discretionary FI and Macro detracted somewhat for the month as gains in risk premia trades and macro were outweighed by curve and relative macro trades.

Systematic macro detracted for the month, with losses being mainly driven by positions in fixed income, commodities and FX.

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