Brummer Multi-Strategy monthly commentary August 2026
Brummer 1xL USD and Brummer 2xL (Bermuda) USD posted estimated returns of -0.8 per cent and -0.9 per cent respectively in August, bringing year-to-date returns to an estimated 3.6 per cent and 5.8 per cent respectively.
Markets
August was a month of notable highs in more than one aspect. Amid renewed tensions and an escalation of conflict in the Middle East and Ukraine/Russia, equities, commodities, and, more notably, bond yields have reached increasingly high levels, with the latter providing concerning signs regarding future economic development. Equities initially saw a strong rebound after the partial unwind of the AI trade in July, bolstered by an exceptional earnings report from Nvidia which helped renew confidence in the theme, dragging up virtually all major stock market indices from the Far East to the west with it. However, things tapered off post-mid month as increasingly elevated bond yields caused investor concern. All in all, worried sentiment wasn’t enough to erase gains as equity indices in the US, mainland Europe, Japan, and Korea ended the month in the positive.
Entering August, investors sold off long-dated US treasuries following the Fed’s decision to hold rates steady, calling into question the central bank’s reaction function. Thus, sovereign bond yields continued their rapid upward climb, as the US national debt passed the historic $40 trillion mark in late August. The US 10-year and 30-year hit highs not seen since 2007 and 2001 respectively, causing Treasury Secretary Scott Bessent to announce the doubling of buybacks of long-term bonds to mitigate growing fiscal risks. Long yields initially fell, but short yields rose as the buybacks were expected to be funded by more issuance on the short-end. Shortly after the initial reaction, bond traders started to question the potential impact of the increased buybacks and together with a hawkish tone from Warsh in Jackson Hole, yields rose once again on a wide front.
In FX markets, the US dollar was weakened against most major currencies including the Euro and British Pound. Most notably though, the Yen weakened against the dollar despite the unprecedented-in-scale intervention in July.
Commodity markets saw a wide increase in prices across assets, mostly driven by geopolitics. Crude oil and natural gas prices climbed once again as military strikes were exchanged between the US and Iran and talks regarding the Strait of Hormuz repeatedly broke down and resumed. Market worries were further exacerbated by Secretary Bessent launching “Operation Economic Outcast”, which threatens sanctions on any country doing business with Iran. In the Black Sea, grain exports were severely halted due escalations in the Ukraine-Russia war causing wheat futures to surge more than 18 per cent.
Brummer Multi-Strategy
The portfolio detracted in August, driven mainly by losses by long/short equity strategies.
The convexity bucket was the largest contributor to performance this month, with the contribution being broad-based. For trend-following on developed markets, performance could mainly be attributed to positioning in commodities such as gold and fossil fuels, fixed income and equity indices, which were lightly offset by minor losses in FX. For alternative markets, profits could be reaped across all asset classes traded, particularly commodities in the energy sector, while agricultural commodities such as sugar and soybeans detracted some.
The fixed income & macro allocation also contributed positively to performance in August, taking advantage of rising rates. Systematic macro saw the greatest gains, driven mostly by long positioning against the US dollar, commodities, and fixed income while equity indices detracted. Discretionary fixed income RV & macro derived further gains from Swedish inflation, which withstood losses in curve trades and European bonds. Long/short credit also saw a profitable month, mainly due to positioning in high yield names in media and automotive sectors. Lastly, Systematic fixed income posted gains, thanks to being short longer dated treasuries.
The long/short equity bucket was, as mentioned, the major detractor in August. Although certain sectors contributed positively to performance, the overall result was weighed down by unusual market movements in a small number of sectors. In US TMT, gains in technology hardware and automotive were erased by positioning in commercial & professional services, media & entertainment and semiconductors. In global healthcare, losses could mainly be attributed to positioning in biotech, pharmaceuticals & life sciences, which were lightly offset by gains in medical equipment. For listed real estate, losses in Asian and Canadian real estate were outweighed by gains in EU real estate names, and for European financials gains were harvested from positioning in financial services and banking while insurance detracted.
Return estimates*
| Last month | Year to date | |
|---|---|---|
| Brummer 1xL USD** | -0.8% | +3.6% |
| Brummer 2xL (Bermuda) USD | -0.9% | +5.8% |
Monthly contribution by strategy bucket (est.)
Capital allocation (est.)***
* These estimates apply to investors who have been invested in the funds since inception. Please note that the final results may deviate.
** Brummer 1xL USD (Brummer Multi-Strategy B USD) unit class was launched August 1st 2024. Year to date performance, up to that point in time, is calculated using the Brummer Multi-Strategy A SEK unit class, adjusted for currency hedging.
*** Allocation per strategy bucket is shown as percentage of total allocated capital. Brummer Multi-Strategy may use leverage and/or allocate to strategies targeting higher volatility than their reference strategy, which means that the total allocated capital can vary over time and be higher than the fund's net asset value.
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