Noteworthy Developments 

Global equities, as represented by the MSCI ACWI Index, declined by 0.6% with varied performance across regions.

Global Equities 

Global equities declined by 0.6%, with US large-cap equities (S&P 500) down 1.3% while international developed (+1.9%) and emerging market equities (+0.5%) delivered positive returns. Weaker US equity performance was driven by heightened uncertainty surrounding Trump’s inconsistent application of tariff policy (announcements followed by delays or pauses in implementation) and fears regarding potential US economic slowdown from the rapid and hatchet-like reduction in federal government employment, which also affects the large federal private contractor landscape. Strong international developed market performance was largely driven by robust European equity performance which benefitted from Germany’s (and likely other European nations) pledge to enact large-scale increases in defense spending. Globally, value stocks (+1.5%) outperformed growth (-2.5%) stocks. Consumer staples, financials, and healthcare sectors performed best (+4.3%, +1.7% and +1.1%) while consumer discretionary, communication services, and technology (-4.9%, -3.6% and -2.0%) performed worst. The Magnificent Seven were down 5.3% following lackluster earnings reports relative to expectations as investors scrutinized sharply increasing capital expenditure plans in the face of slowing earnings growth. 

Fixed Income 

The US Aggregate Bond Index rose 2.2% with performance driven by coupon income and sharp declines of 20bps to 35bps in bond yields across the curve. Bond yields declined as US policy and economic uncertainty increased. US government bonds were up 2.2% and investment grade corporate bonds rose 2.0%. High-yield bonds appreciated by 0.6% as high coupon rates were augmented by declines in base rates but offset by widening credit spreads. Leveraged loans only increased 0.1% as high coupon income was offset by widening spreads.

Alternatives 

The HFRX Global Hedge Fund Index was up 0.3% with most strategies delivering positive performance. Credit and global macro/trend following strategies performed best (+0.8% and +0.7%) while long/short equity hedge funds performed worst at -0.5%.

Manager Comments

Linden: +2.0% 

Outperformed the broader HFRX Index (+0.3%) and convertible arbitrage index (+0.2%). Strong performance driven by short equity hedge positions in volatile technology stocks, coupled with benefits from new issuances at favorable terms.

Russell 1000 Growth Index: -3.6% 

Underperformed the S&P 500 (-1.3%) given its large exposure to technology, communication services, and certain consumer discretionary stocks.