Pivotal Point of View – February 2025

For allocators evaluating hedge fund performance, context matters.

Pivotal Points: 

Pivotal Point In Time: DeepSeek and tariffs unnerved markets, but hedge funds sidestepped the downside and made the most of the upside in January. 

• January’s DeepSeek and US tariff broadsides were largely dodged by managers over a rollercoaster month. The PivotalPath Hedge Fund Composite Index ended January up 1.5%, while the rest of our main indices also generated positive returns.

  • Equity players, boosted by a decent earnings season and signs of life in some ex-US global equity markets impressed, with the PivotalPath Equity Diversified Index up 2.5%.
  • And while the PivotalPath Equity Sector Index was more muted – although still starting the year well, with a gain 1.2% – it had some standout constituents.
    • Highlights among this specialist cohort included the PivotalPath Equity Sector: Technology/Media/Telecom Index – up 2.6%. 
    • Also hitting 2.6% the PivotalPath Equity Sector: Financials Index, showcased funds that have skillfully navigated a sector still benefiting from ongoing higher-for-longer conditions and is ripe for some of 2025’s predicted M&A activity. 

• While TMT and Financials impressed, they were both bested by the PivotalPath Equity Sector: Consumer/Retail Index, which hit 3.2% last month.

  • Managers spoken to by PivotalPath see investment opportunities across the luxury-end of the consumer discretionary space, a sector that is partially immune to higher rates, expectant of permanently lower US tax rates and could even leverage early signs of a resurgent China.