Brummer Multi-Strategy UCITS monthly commentary January 2025

Markets

The start of 2025 saw equity markets move higher despite the overhang of potential tariff risks and inflationary pressures. US equities posted gains in January, though market breadth remained narrow. The release of DeepSeek’s latest AI model, while capturing investor attention, led to a short-lived sell-off in US tech and energy stocks. European equities outperformed, benefiting from a rotation away from US tech stocks and signs of improvement in eurozone macroeconomic data.

Bond markets saw increased volatility in January. Expectations for higher US inflation fuelled by President Trump’s proposed tax cuts, tariffs and immigration curbs pushed US 10-year yields higher before retreating on the back of a softer than expected US inflation print. The divergence in global central bank policies remains in focus, with the Federal Reserve on hold, the ECB easing, and the Bank of Japan tightening.

Currency markets saw a reversal in the US dollar’s fortunes. After reaching a two-year high in mid-January, the dollar weakened. Its trajectory from here will largely depend on the White House’s approach to tariffs; any escalation could provide fresh tailwinds for the greenback.

Gold continued to shine as the preferred safe-haven asset, with prices strengthening further in January with central banks around the world remaining steadfast in their gold purchases.

Brummer Multi-Strategy UCITS

Market neutral long/short equity was the primary driver of Brummer Multi-Strategy’s returns in January. Despite a volatile month for US tech stocks, BMS’s TMT investment teams performed well generating solid long and short alpha particularly within the media and entertainment sub-sector and within consumer discretionary names. The financials sector was also very profitable with positions in the diversified financials space driving gains. The Healthcare space was essentially flat with gains in healthcare equipment names offset by losses in pharmaceuticals. Listed real estate ended roughly flat for the month.

Systematic trend-following was profitable in developed markets with solid gains in commodity positioning (coffee, gold) and currencies (long the USD). In alternative markets, power was a difficult sector given choppy markets, emerging market fixed income positioning also proved costly in January.

Systematic macro was a detractor this month with losses stemming from relative value equity and fixed income positioning.

As of February 1^st, BMS UCITS’s portfolio managers decided not to rebalance the risk in the portfolio in any significant way.

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