Noteworthy Developments
Global equities, as represented by the MSCI ACWI Index, declined by 3.2% in CAD (+0.9% in USD) during April. Equities and bonds experienced massive intra-month volatility following President Trump’s Liberation Day tariff announcement on April 2nd and subsequent modifications of tariff policy over the month. The CAD strengthened by 4.1% vs. the USD during the month.
Global Equities
Global equities declined by 3.2% in CAD (+0.9% in USD), with US large-cap equities (S&P 500) down 4.8% (-0.7% USD), while international developed (+0.3% and +4.6% USD) and emerging market equities (-2.8% and +1.3% USD) performed much better.
The S&P 500 initially tumbled by 15% in USD over just three trading days following President Trump’s April 2nd Liberation Day tariff announcement, which would have significantly raised tariffs across most countries to between 10% and 45% effective rates and increased the overall US tariff rate from 2.5% to over 25.0%. The magnitude of the proposed tariff increases was much higher than anticipated. In addition to the swift S&P 500 decline, US Treasury bond yields exhibited highly unusual behavior with 10-year US
Treasury bond yields initially declining as expected, but then rapidly climbing by 70bps in less than a week, setting off concerns about financial market stability. The Trump administration quickly rolled back the massively elevated tariff rates for most countries to a more palatable 10%, while escalating tariffs with China (ultimately these rates reached 145% with China retaliating and raising tariffs on US imports to 125%). The S&P 500 rallied significantly from the April 8th lows with strong subsequent performance driven by a) rollback of initial draconian tariffs, b) resilient economic data especially with regards to the labor market, and c) better-than-expected corporate earnings especially from the large-cap bellwether technology companies. On a relative basis, international developed and emerging market equities outperformed US equities largely due to currency translation. The USD weakened substantially by 4% during the month given the tariff uncertainty.
Globally, growth stocks (-1.2% and +3.0% in USD) significantly outperformed value stocks (-5.2% and -1.2% in USD). Consumer staples, industrials, and technology sectors (-0.5%, -1.5%, and -2.2%) performed best while energy and health care sectors (-14.5%, and -5.7%)
performed worst. The Magnificent Seven were down 4.1% (flat in USD), erasing substantial declines after rallying strongly following better-than-expected earnings reports.
Fixed Income
The ICE BOFA Canada Broad Market Index was down 0.8%. Corporate, government, and municipal bond indexes were down between 0.6% and 1.0%. This decline in performance was driven by increasing bond yields of 7bps-15bps across various maturities.
Alternatives
The HFRX Global Hedge Fund Index was down 4.5% (-0.4% in USD) with mixed performance across strategies. Convertible arbitrage (-2.9% and +1.2% in USD) and credit strategies (-3.6% and +0.5% in USD) performed best while global macro / trend following hedge funds performed worst at -7.0% and -3.0% in USD.
Manager Comments
Alphadyne: -10.7% (-6.9%) in USD)
Challenging month with losses driven by both macro directional (largely bets on Japanese rates) and relative value themes (largely US bets) as bond yields fluctuated dramatically throughout the month post the Liberation Day tariff announcements. Given at global macro strategies are often highly levered, extreme volatility in underlying positions such as interest rates can lead to abnormally outsized returns over short time periods.
Apollo Credit Strategies: -2.8% (+1.3% in USD)
Outperformed the HFRX hedge fund index (-4.5% and -0.4% in USD) with relative outperformance driven by idiosyncratic long and short credit positions.
CAD April Market Commentary
CAD April Market Commentary
Noteworthy Developments
Global equities, as represented by the MSCI ACWI Index, declined by 3.2% in CAD (+0.9% in USD) during April. Equities and bonds experienced massive intra-month volatility following President Trump’s Liberation Day tariff announcement on April 2nd and subsequent modifications of tariff policy over the month. The CAD strengthened by 4.1% vs. the USD during the month.
Global Equities
Global equities declined by 3.2% in CAD (+0.9% in USD), with US large-cap equities (S&P 500) down 4.8% (-0.7% USD), while international developed (+0.3% and +4.6% USD) and emerging market equities (-2.8% and +1.3% USD) performed much better.
The S&P 500 initially tumbled by 15% in USD over just three trading days following President Trump’s April 2nd Liberation Day tariff announcement, which would have significantly raised tariffs across most countries to between 10% and 45% effective rates and increased the overall US tariff rate from 2.5% to over 25.0%. The magnitude of the proposed tariff increases was much higher than anticipated. In addition to the swift S&P 500 decline, US Treasury bond yields exhibited highly unusual behavior with 10-year US
Treasury bond yields initially declining as expected, but then rapidly climbing by 70bps in less than a week, setting off concerns about financial market stability. The Trump administration quickly rolled back the massively elevated tariff rates for most countries to a more palatable 10%, while escalating tariffs with China (ultimately these rates reached 145% with China retaliating and raising tariffs on US imports to 125%). The S&P 500 rallied significantly from the April 8th lows with strong subsequent performance driven by a) rollback of initial draconian tariffs, b) resilient economic data especially with regards to the labor market, and c) better-than-expected corporate earnings especially from the large-cap bellwether technology companies. On a relative basis, international developed and emerging market equities outperformed US equities largely due to currency translation. The USD weakened substantially by 4% during the month given the tariff uncertainty.
Globally, growth stocks (-1.2% and +3.0% in USD) significantly outperformed value stocks (-5.2% and -1.2% in USD). Consumer staples, industrials, and technology sectors (-0.5%, -1.5%, and -2.2%) performed best while energy and health care sectors (-14.5%, and -5.7%)
performed worst. The Magnificent Seven were down 4.1% (flat in USD), erasing substantial declines after rallying strongly following better-than-expected earnings reports.
Fixed Income
The ICE BOFA Canada Broad Market Index was down 0.8%. Corporate, government, and municipal bond indexes were down between 0.6% and 1.0%. This decline in performance was driven by increasing bond yields of 7bps-15bps across various maturities.
Alternatives
The HFRX Global Hedge Fund Index was down 4.5% (-0.4% in USD) with mixed performance across strategies. Convertible arbitrage (-2.9% and +1.2% in USD) and credit strategies (-3.6% and +0.5% in USD) performed best while global macro / trend following hedge funds performed worst at -7.0% and -3.0% in USD.
Manager Comments
Alphadyne: -10.7% (-6.9%) in USD)
Challenging month with losses driven by both macro directional (largely bets on Japanese rates) and relative value themes (largely US bets) as bond yields fluctuated dramatically throughout the month post the Liberation Day tariff announcements. Given at global macro strategies are often highly levered, extreme volatility in underlying positions such as interest rates can lead to abnormally outsized returns over short time periods.
Apollo Credit Strategies: -2.8% (+1.3% in USD)
Outperformed the HFRX hedge fund index (-4.5% and -0.4% in USD) with relative outperformance driven by idiosyncratic long and short credit positions.
Bitterroot Capital Advisors
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