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. The Canadian dollar weakened 2.0% against the U.S. dollar.
Global Equities: Global equities (MSCI ACW Index) declined 5.3% 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. U.S. large-cap equities (S&P 500) fell 3.1%, while international developed equities declined 8.5% and merging market equities fell 11.3%.
Emerging markets led the decline, with weakness across Asia reflecting sensitivity to global growth expectations, a stronger U.S. 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 (-5.6%) and value (-5.0%) stocks declined. A broad risk-off environment drove sector performance, with cyclicals (materials -9.9%, industrials -9.0%) performing worst. Even defensive sectors such as consumer staples (-6.9%) and healthcare (-6.5%) declined. Only energy (+12.7%) delivered positive performance.
Fixed Income: The Canada Broad Market Index declined 2.0% in March, as rising sovereign yields weighed on fixed-income returns. Canadian government bonds fell 1.7%, with yields increasing broadly across maturities by approximately 30–50 basis points.
Provincial and municipal bonds declined 2.3%, while corporate bonds fell 1.8%, as higher base rates drove losses across credit markets.
Alternatives: Hedge funds declined during March, with the HFRX Global Hedge Fund Index falling 1.0% (-3.0% in USD). Equity hedge (-2.5%), global macro / trend following (-1.7%), and convertible arbitrage strategies (-1.7%)
performed worst.
Manager Comments:
Carrhae (-15.0%): Modestly underperformed the EM Index (-11.3%) due to overweight positions in Korean equities.
Apollo Credit Strategies: (+2.6%): Outperformed the HFRX Index (-1.0%) and relative-value credit strategies (+0.5%) due to performance of idiosyncratic long bond positions coupled with gains from short positions and hedges.
Linden: (+2.5%): Outperformed the HFRX Index (-1.0%) and convertible arbitrage strategies (-1.6%) due to a combination of idiosyncratic positive contributions from bonds benefitting from credit events coupled with equity
shorts capitalizing on heightened volatility.
CAD 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. The Canadian dollar weakened 2.0% against the U.S. dollar.
Global Equities: Global equities (MSCI ACW Index) declined 5.3% 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. U.S. large-cap equities (S&P 500) fell 3.1%, while international developed equities declined 8.5% and merging market equities fell 11.3%.
Emerging markets led the decline, with weakness across Asia reflecting sensitivity to global growth expectations, a stronger U.S. 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 (-5.6%) and value (-5.0%) stocks declined. A broad risk-off environment drove sector performance, with cyclicals (materials -9.9%, industrials -9.0%) performing worst. Even defensive sectors such as consumer staples (-6.9%) and healthcare (-6.5%) declined. Only energy (+12.7%) delivered positive performance.
Fixed Income: The Canada Broad Market Index declined 2.0% in March, as rising sovereign yields weighed on fixed-income returns. Canadian government bonds fell 1.7%, with yields increasing broadly across maturities by approximately 30–50 basis points.
Provincial and municipal bonds declined 2.3%, while corporate bonds fell 1.8%, as higher base rates drove losses across credit markets.
Alternatives: Hedge funds declined during March, with the HFRX Global Hedge Fund Index falling 1.0% (-3.0% in USD). Equity hedge (-2.5%), global macro / trend following (-1.7%), and convertible arbitrage strategies (-1.7%)
performed worst.
Manager Comments:
Carrhae (-15.0%): Modestly underperformed the EM Index (-11.3%) due to overweight positions in Korean equities.
Apollo Credit Strategies: (+2.6%): Outperformed the HFRX Index (-1.0%) and relative-value credit strategies (+0.5%) due to performance of idiosyncratic long bond positions coupled with gains from short positions and hedges.
Linden: (+2.5%): Outperformed the HFRX Index (-1.0%) and convertible arbitrage strategies (-1.6%) due to a combination of idiosyncratic positive contributions from bonds benefitting from credit events coupled with equity
shorts capitalizing on heightened volatility.
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