Brummer Multi-Strategy monthly commentary March 2025
Brummer Multi-Strategy (BMS) USD and Brummer Multi-Strategy 2xL (Bermuda) USD posted estimated returns of -1.6 and -2.9 per cent respectively in March.
Markets
This month, news cycles continued to be dominated by the prospect of Trump-imposed tariffs and their wide-reaching effects. The turbulent markets, primarily brought on by the US announcing tariffs, delaying them, reinforcing them, and so on, caused hedge funds to dramatically reduce their gross positions (both long and short) in equities at the start of the month, trying to limit wide losses brought on by the recent volatility. This deleveraging of positions was reportedly the largest since the invasion of Ukraine in 2022 and encapsulates the market uncertainty that is permeating the US as well as the globe. Equities in the US continued downwards in the beginning of March as the previously proposed and delayed tariffs on Canada and Mexico came into effect, leaving little to no doubt that US Equities were in correction, with the tech and healthcare sectors leading the way in terms of losses. The drawdown was hampered somewhat towards the latter half of the month as investors started buying at the trough, but elevated worries of a slowdown in economic growth and the possibility of stagflation kept US equities from rebounding significantly. In Europe, equities took a downturn as the global impact of American turbulence made itself clear. Markets did rebound somewhat when Germany announced massive investments into defence and infrastructure and ended the month in the positive. Eastwards, Japanese equities ended the month on a flat note after a rally brought on by favourable macro prints was offset by the introduction of new automotive tariffs from the US while the Chinese market ended on a positive note, helped by the announcement of further stimulus from the CCP.
Sovereign bond yields saw mixed development between markets in March. While US yields were flat, European long duration yields soared as investors anticipate an influx of bond issuances from Germany in light of their aforementioned investments into defence and infrastructure with the German 10y Bund yield experiencing its steepest climb since German reunification in 1990. Consequently, the US dollar depreciated heavily against the Euro and most other major currencies reaching re-election levels.
Oil prices fluctuated heavily throughout the month as conflicts escalated and de-escalated in the middle east, finally ending the month on a flat note on the back of Trump announcing a 25% tariff on countries buying oil from Venezuela. In other markets, gold prices rallied heavily pushing the price over $3000 per troy ounce with silver and copper enjoying even sharper rallies.
Brummer Multi-Strategy
L/S equity was the main detracting strategy bucket this month, where solid short alpha was outweighed by negative long alpha across sectors.
Positioning in US TMT sectors proved to be the largest detractor, where losses stemmed primarily from positioning in semiconductors, media & entertainment and consumer services. Some relief was gained as short positioning in software and commercial services helped mitigate losses. In global healthcare sectors, solid short alpha in healthcare equipment was offset by positioning in pharmaceuticals and life sciences. Among European financials, profits in the insurance and banking space were offset by positioning in diversified financials. Lastly, despite solid long alpha, positioning in listed real estate was a detractor for the month.
March’s choppy market environment proved difficult for BMS’s systematic trend strategies. In developed markets, gains in commodities such as gold and cattle were offset by losses in FX, fixed income and equities while in alternative markets losses in equities, credit and FX were somewhat offset by positioning in commodities and fixed income.
Systematic macro was the only positively contributing strategy bucket for the month, albeit close to zero. There, relative value positioning in developed markets produced profits as gains in FX and equities offset losses in fixed income and commodities.
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