Markets

Even as the conflict in Iran showed little to no signs of easing, April saw a marked improvement in investor risk appetite, leading to broad-based recoveries across asset classes despite ongoing fears of stagflation and continually elevated oil prices.

Equity markets in particular saw a spectacular recovery as investors releveraged their positions and redeployed risk, causing themes such as AI (long semiconductors vs short softwares), which reversed in March, to rebound once more. In the US, equities rallied strongly, driven mainly by the aforementioned themes that were bolstered by strong earnings reports and the unveiling of Anthropic’s new Claude Mythos model, which is speculated to pose a significant threat to current software infrastructure. In Asia, the renewed confidence in AI caused chipmakers and technology hardware corporations in Japan and South Korea to rally significantly. As a result, the Nikkei 225 and KOSPI indices ended the month up approximately 18 per cent and 34 per cent in USD terms, respectively. In Europe, equities managed to recover March’s losses, albeit less spectacularly than its neighbours to the East and West, mainly due to a lack of exposure to AI-friendly themes.

As risk appetite returned to markets, the US dollar weakened significantly after its gains in March, depreciating against all G10 currencies. Notably, the Japanese Yen saw significant turbulence by the end of April as the BoJ intervened following record lows, causing the currency to strengthen from 160 per USD to as low as 156 per USD overnight.

Commodity markets continued to be dominated by the price of crude oil, as Brent and WTI prices saw whipsaw movements over the month due to the remained closure of the Strait of Hormuz in spite of the reported ceasefire agreements. Other commodities such as precious metals saw more muted performance, while base metals such as copper and steel saw an increase, following the elevated inflation levels.

Sovereign bond yields continued to be more or less determined by the oil price, with strikingly similar movements on G10 yields to crude oil prices. The lone exception being naturally the yield on Japanese bonds, which saw a continued steady climb.

Brummer Multi-Strategy UCITS

Following a resilient March, BMS UCITS and its constituent strategies managed to leverage the redeployment of risk on equity markets and the continued uncertainty on bond and commodity markets to generate solid performance and alpha.

The largest contribution to the portfolio in April came from the L/S equity bucket, with performance driven by both the long and short books. In US TMT sectors, significant gains were generated through positioning in semiconductors and technology hardware as well as in software and IT services, with profits further boosted by favourable earnings reports on both the long and short end. Global healthcare sectors also contributed favourably to the portfolio, with gains in pharmaceuticals, biotech and health care equipment which were lightly offset by positioning in household products. Other positioning in financial sectors and listed real estate ended roughly flat for the month.

The systematic trend bucket also contributed strongly to the portfolio’s performance. In developed markets, profits were generated thanks to favourable positioning in Asian equities. These were lightly offset by less favourable FX and fixed income positions. In alternative markets, performance was positive yet more muted, with gains in credit partly offset by losses in fixed income.

Systematic Macro saw gains from across asset classes, mainly gaining on US equities, fixed income and commodities such as gasoline and various forms of oil.

Return

Monthly contribution by strategy type (est.)

Capital allocation (est.)*