For allocators evaluating hedge fund performance, context matters.
Pivotal Point In Time:
Tariffs caused markets to tumble, managers sold off at the most accelerated rate in over a decade, and adjusted for new economic conditions by cutting gross and net leverage.
- If you believe the cliché, March is meant to come in like a lion and leave like a lamb. This year it was the political-animals that stole the show, book-ending a volatile month with a series of trade policy pronouncements that have seen 2025’s first quarter defined by 1. a raft of tariffs and 2. seriously unsettled markets. The PivotalPath Composite Index was down 1.0%, leaving it clinging to YTD gains of 0.2%.
- However, Composite performance still beat major indices, besting the Nasdaq’s 8.21%, the S&P 500’s 5.63%, as well as the MSCI World’s 4.45%.
- Given the initial sting of tariffs was first felt by equity markets, the PivotalPath Equity Sector Index was the most impacted of the main indices, falling by 4.3% across March. Directional and sector specialist funds were hit particularly hard, although low net and variable net players also sustained losses.
- The PivotalPath Equity Sector: Technology/Media/Telecom Index was the biggest loser, down 5.4%, while the PivotalPath Equity Sector: Healthcare Index and PivotalPath Equity Sector: Consumer/Retail Index were close behind with a respective 5.0% and 4.8%.
- Tech and consumer sectors were rattled by the treat of overlapping tariffs chilling supply chains and eroding earnings. Healthcare was largely holed by biotech’s concerns around high borrowing costs and the philosophical shift embodied by US Health Secretary, Robert F Kennedy Jr.
- While fundamental equity players were tested, quant equity continued to demonstrate a clean pair of heels, finishing March as the best performing main index. The PivotalPath Equity Quant Index was up 1.5% across the month, making for a YTD of 4.3%, as the cohort showed how their fast-paced adaptability can make the most of volatile markets.
- Macro managers also continued a run of good performance as they navigated a slew of global policy shifts, with a number benefiting from March’s weakening USD and US equity market. The PivotalPath Global Macro: Discretionary Index was up 1.2% in March and 3.7% YTD.
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