Brummer multi-strategy flagship inches into positive territory despite October market slide

Impact

Brummer & Partners’ flagship multi-manager hedge fund vehicle squeezed into positive territory in October, despite rising Covid-19 infections and renewed lockdown fears sending stock markets southwards following a strong early start to the month.

The Stockholm-based multi-strategy hedge fund firm’s Brummer Multi-Strategy (BMS) multi-manager fund - which invests in a range of single-strategy hedge funds –  rose 0.1 per cent in its dollar share class, and 0.2 per cent in its SEK-denominated tranche. It is now up 4.4 per cent since the start of the year.

The Brummer Multi-Strategy 2xL (BMS 2xL) SEK class meanwhile posted estimated returns of 0.2 in both SEK and USD classes, putting its YTD return at 7.5 per cent.

Equity long/short, credit, systematic trend-following and discretionary macro all generated positive returns for the multi-fund vehicle, as stock markets rose earlier in the month amid hopes of a new US fiscal stimulus package.

The long/short equity strategy Black-and-White proved the largest contributor for the month, generating 2.6 per cent with alpha driving performance. Black-and-White has made almost 15 per cent year-to-date.

But growing Covid-19 infections - coupled with concerns over new restrictions - sent most global stock markets lower for the month.

Another long/short equity strategy - Manticore - struggled with alpha specific losses and slipped 2.2 per cent last month. However, the fund remains up more than 23 per cent over the 10-month period to the end of October.

Meanwhile, Florin Court rose 1.4 per cent in October, with gains primarily in power markets, emerging market fixed income, commodity markets and short dollar positioning. The systematic trend-following fund is down slightly YTD, at -0.6 per cent.

Elsewhere, discretionary macro strategy Arete capitalised on equity positioning with a 0.7 per cent monthly gain, which brought its year-to-date performance 4.4 per cent.  Observatory, the long/short credit strategy, is up almost 2 per cent since the start of the year, having added 0.3 per cent last month from European relative value positions.

On the downside, systematic equities strategy AlphaCrest lost close to 1 per cent – but remains up some 3 per cent since the start of 2020.

Fixed income relative value strategy Frost, machine learning strategy Lynx Constellation, and trend following strategy Lynx were also each in marginally negative territory.

On the broader geopolitical and macroeconomic picture, Brummer said:  “China’s economic recovery continues to gather pace driven by a strong industry and investment rebound while its currency has also continued to strengthen.

“In commodities, the price of oil fell on the back of decreased demand forecasts as Covid lockdowns return.”