Noteworthy Developments: Global markets declined in March amid escalating tensions in the Middle East, which led to swift increases
in energy prices, increased volatility, and broad risk aversion across asset classes.
Global Equities: Global equities (MSCI ACW Index) declined 7.2% in March amid rising geopolitical risk driven by escalating tensions in the Middle East, which caused sharp surges in oil prices, massive shipping disruption, and heightened concerns about inflation and global growth. The selloff was broad-based across regions and style factors. US large-cap equities (S&P 500) fell 5.0%, while international developed equities declined 10.3% and emerging market equities fell 13.1%
Emerging markets led the decline, with weakness across Asia reflecting sensitivity to global growth
expectations, a stronger US dollar, and rising geopolitical risk. International developed equities also fell sharply, with higher energy prices and tighter financial conditions pressuring economic outlooks in Europe and Japan.
Both growth (-7.5%) and value (-6.9%) stocks declined. A broad risk-off environment drove sector performance, with cyclicals (materials -11.7%, industrials -10.8%) performing worst. Even defensive sectors such as consumer staples (-8.8%) and healthcare (-8.4%) declined. Only energy (+10.4%) delivered positive performance.
Fixed Income: The US Aggregate Bond Index declined 1.8% during March. US Treasuries fell 1.7% as yields rose across the curve by roughly 30–45 basis points, reflecting higher inflation expectations tied to elevated oil prices and rising
geopolitical risk.
Investment-grade corporate bonds declined 2.0%, as higher base rates weighed on returns and modest spread widening added further pressure. Riskier credit outperformed higher-quality fixed income. High-yield bonds declined 1.2% due to base yields rising, and spreads widening. Leveraged loans gained 0.6% with coupon yields
driving performance.
Alternatives: Hedge funds declined during March, with the HFRX Global Hedge Fund Index falling 3.0%. Equity hedge (-4.4%), global macro / trend following (-3.6%), and convertible arbitrage strategies (-3.6%) performed worst.
Manager Comments:
Carrhae (-16.7%): Modestly underperformed the EM Index (-13.1%) due to overweight positions in Korean equities.
Apollo Credit Strategies: (+0.6%): Outperformed the HFRX Index (-3.0%) and relative-value credit strategies (-1.5%) due to performance of idiosyncratic long bond positions coupled with gains from short positions and hedges.
Linden: (+0.4%): Outperformed the HFRX Index (-3.0%) and convertible arbitrage strategies (-3.6%) due to a combination
of idiosyncratic positive contributions from bonds benefitting from credit events coupled with equity shorts benefitting from
heightened volatility.
USD March Market Commentary
Noteworthy Developments: Global markets declined in March amid escalating tensions in the Middle East, which led to swift increases
in energy prices, increased volatility, and broad risk aversion across asset classes.
Global Equities: Global equities (MSCI ACW Index) declined 7.2% in March amid rising geopolitical risk driven by escalating tensions in the Middle East, which caused sharp surges in oil prices, massive shipping disruption, and heightened concerns about inflation and global growth. The selloff was broad-based across regions and style factors. US large-cap equities (S&P 500) fell 5.0%, while international developed equities declined 10.3% and emerging market equities fell 13.1%
Emerging markets led the decline, with weakness across Asia reflecting sensitivity to global growth
expectations, a stronger US dollar, and rising geopolitical risk. International developed equities also fell sharply, with higher energy prices and tighter financial conditions pressuring economic outlooks in Europe and Japan.
Both growth (-7.5%) and value (-6.9%) stocks declined. A broad risk-off environment drove sector performance, with cyclicals (materials -11.7%, industrials -10.8%) performing worst. Even defensive sectors such as consumer staples (-8.8%) and healthcare (-8.4%) declined. Only energy (+10.4%) delivered positive performance.
Fixed Income: The US Aggregate Bond Index declined 1.8% during March. US Treasuries fell 1.7% as yields rose across the curve by roughly 30–45 basis points, reflecting higher inflation expectations tied to elevated oil prices and rising
geopolitical risk.
Investment-grade corporate bonds declined 2.0%, as higher base rates weighed on returns and modest spread widening added further pressure. Riskier credit outperformed higher-quality fixed income. High-yield bonds declined 1.2% due to base yields rising, and spreads widening. Leveraged loans gained 0.6% with coupon yields
driving performance.
Alternatives: Hedge funds declined during March, with the HFRX Global Hedge Fund Index falling 3.0%. Equity hedge (-4.4%), global macro / trend following (-3.6%), and convertible arbitrage strategies (-3.6%) performed worst.
Manager Comments:
Carrhae (-16.7%): Modestly underperformed the EM Index (-13.1%) due to overweight positions in Korean equities.
Apollo Credit Strategies: (+0.6%): Outperformed the HFRX Index (-3.0%) and relative-value credit strategies (-1.5%) due to performance of idiosyncratic long bond positions coupled with gains from short positions and hedges.
Linden: (+0.4%): Outperformed the HFRX Index (-3.0%) and convertible arbitrage strategies (-3.6%) due to a combination
of idiosyncratic positive contributions from bonds benefitting from credit events coupled with equity shorts benefitting from
heightened volatility.
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