Insight
Aurum’s quarterly review – Q1 2025
In summary…
Aurum’s commingled and bespoke fund of hedge funds $US classes delivered positive net returns over Q1 2025, with performance ranging from +1.0% to +3.9%. The Aurum funds notably outperformed global equities, which were down 2.0%*. Aurum’s focus on strategies with low beta to traditional assets helped maintain positive momentum amidst market volatility. Macro, systematic and event driven strategies contributed positively, while multi-strategy allocations ranged from positive to slightly negative; allocations to equity strategies generally detracted.
About Aurum
Aurum is an investment management firm focused on selecting hedge funds and managing fund of hedge fund portfolios for some of the world’s most sophisticated investors. Aurum also offers a range of single manager feeder funds.
Aurum’s portfolios are designed to grow and protect clients’ capital, while providing consistent uncorrelated returns. With 30 years of hedge fund investment experience, Aurum’s objective is to lower the barriers to entry enabling investors to access the world’s best hedge funds.
Aurum conducts extensive research and analysis on hedge funds and hedge fund industry trends. This research paper is designed to provide data and insights with the objective of helping investors to better understand hedge funds and their benefits.
Multi-strategy
Allocations to multi-strategy funds provided mixed results in different Aurum funds. January delivered strong positive performance driven by macro, fixed income, quantitative equities, and fundamental equity market-neutral strategies. However, in February and March, multi-strategy funds saw dispersion in returns, with funds having larger allocations to equity long/short strategies particularly affected by factor rotations and market de-grossing.
Macro
Macro allocations were consistently positive throughout the quarter. Notable contributions came from short equity positions in developed markets, particularly in the US technology sector. Short Japanese fixed income positions benefited from rising Japanese bond yields as inflation exceeded expectations. Long positions in agricultural commodities, copper, and precious metals also positively impacted performance. These gains were tempered slightly by weaker results in currency and developed market rates trading.
Systematic
Systematic allocations were notably strong performers, benefiting significantly from heightened volatility and the factor rotations that characterised market activity in Q1. Statistical arbitrage strategies capitalised effectively on volatility stemming from DeepSeek’s entry into the AI sector, while machine learning, systematic futures, and volatility strategies also consistently generated positive returns. However, funds with broader factor exposures underperformed compared to more tightly managed systematic funds.
Event driven
Event driven allocations delivered positive performance across the entire quarter. The strategy benefited from a general tightening of spreads, stable deal activity, and the successful completion or advancement of several high-profile transactions, particularly in the mining, sports/entertainment, and UK waste management sectors. This positive performance was slightly offset by regulatory challenges in certain US deals and negative attribution from special situations strategies.
Equity strategies
Equity strategy allocations detracted from overall fund performance in the quarter. Initial positivity in January, driven by US and European equity markets, gave way to declines in February and March as markets experienced a factor rotation from momentum (such as technology) to value and defensive sectors. Japanese and China-focused equity strategies underperformed notably in February, although Japanese markets showed some relative strength in March compared to US, European, and Chinese markets.
Conclusion
Positive performance in Q1 2025 demonstrates the value of Aurum’s diversified approach in the face of ratcheting market volatility. As we head into Q2 2025 and the acute oscillations in markets following the introduction of President Trump’s tariffs – Aurum remains committed to identifying skilled managers with the robust risk management capabilities to generate returns across a range of market environments.
*Equities = S&P Global BMI (US Dollar).
Bond Index
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Disclaimer
This Post represents the views of the author and their own economic research and analysis. These views do not necessarily reflect the views of Aurum Fund Management Ltd.. This Post does not constitute an offer to sell or a solicitation of an offer to buy or an endorsement of any interest in an Aurum Fund or any other fund, or an endorsement for any particular trade, trading strategy or market. This Post is directed at persons having professional experience in matters relating to investments in unregulated collective investment schemes, and should only be used by such persons or investment professionals. Hedge Funds may employ trading methods which risk substantial or complete loss of any amounts invested. The value of your investment and the income you get may go down as well as up. Any performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable indicator of future results. Returns may also increase or decrease as a result of currency fluctuations. An investment such as those described in this Post should be regarded as speculative and should not be used as a complete investment programme. This Post is for informational purposes only and not to be relied upon as investment, legal, tax, or financial advice. Whilst the information contained in this Post (including any expression of opinion or forecast) has been obtained from, or is based on, sources believed by Aurum to be reliable, it is not guaranteed as to its accuracy or completeness. This Post is current only at the date it was first published and may no longer be true or complete when viewed by the reader. This Post is provided without obligation on the part of Aurum and its associated companies and on the understanding that any persons who acting upon it or changes their investment position in reliance on it does so entirely at their own risk. In no event will Aurum or any of its associated companies be liable to any person for any direct, indirect, special or consequential damages arising out of any use or reliance on this Post, even if Aurum is expressly advised of the possibility or likelihood of such damages.
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