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Multi-manager hedge fund Brummer continues recovery, as market surge drives gains

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Long-running multi-manager hedge fund Brummer & Partners’ flagship vehicle has generated gains across its equity, credit, macro and relative value strategies, as equities rose last month amid hopes of a global economic recovery.

Long-running multi-manager hedge fund Brummer & Partners’ flagship vehicle has generated gains across its equity, credit, macro and relative value strategies, as equities rose last month amid hopes of a global economic recovery.

The positive performance marks a reversal of the losses suffered by Brummer earlier in the year, when the Stockholm-based firm warned of “great concern and high volatility” as the coronavirus pandemic gripped markets.

The Brummer Multi-Strategy multi-manager fund – which invests in a range of single-strategy hedge funds – returned 3 per cent in May, with seven of its nine investment strategies in positive territory. The Brummer Multi-Strategy 2xL (BMS 2xL) meanwhile surged 5.8 per cent.

Both funds are now up more than 1 per cent for the year.

But the long-running hedge fund pioneer cautioned on Tuesday that renewed tensions between the US and China may dent hopes of a nascent global recovery.

As equities rose further in May – powered by a mix of lockdown easing in many countries, fresh hopes of a Covid-19 vaccine, and expectations of further central bank stimulus – the BMS vehicle’s two US long/short equity funds, Manticore and Black-and-White, led performance.

Manticore advanced almost 7 per cent, boosted by “significant” market neutral alpha, while Black-and-White added 4 per cent for the month.

Observatory, the long/short credit fund, gained 3.6 per cent from idiosyncratic relative value bets, while systematic equity strategy AlphaCrest rose 3.8 per cent.

Brummer noted how oil prices surged as a result of production reductions and storage concerns during May, while in currency markets, the USD and GBP weakened, with bond yields rising slightly.

As a result, Hong Kong-based macro fund Arete took profits from equity positions as well as in currencies, interest rates and commodities, with the fund recording a 1.9 per cent monthly gain.

The Frost Fund, which specialises in interest rate relative value bets, made 2.2 per cent in May.

On the downside, machine learning strategy Lynx Constellation gave back 1.7 per cent in May, while systematic trend-follower Florin Court also ended the month negative, at -0.4 per cent.

Managers made “minor adjustments” to the portfolio as of 1st June, Brummer said.

Despite risk appetite among investors being on the up, the Swedish hedge fund pioneer cautioned that “escalating tensions between the US and China increased the uncertainty about the recovery.”

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