PivotalPath has released their monthly report, the Pivotal Point Of View, which gives a full roundup of hedge fund performance last month. This was a longer one than usual, as we examined the impact of tariffs on returns, how managers positioned themselves, and which strategies did best in this environment.
Key Takeaways:
Tariffs caused markets to tumble, managers sold off at the most accelerated rate in over a decade, and adjusted for new economic conditions by cutting gross and net leverage.
Read more hedge fund letters here
- If you believe the cliché, March is meant to come in like a lion and leave like a lamb. This year it was the political-animals that stole the show, book-ending a volatile month with a series of trade policy pronouncements that have seen 2025’s first quarter defined by 1. a raft of tariffs and 2. seriously unsettled markets. The PivotalPath Composite Index was down 1.0%, leaving it clinging to YTD gains of 0.2%.
- However, Composite performance still beat major indices, besting the Nasdaq’s 8.21%, the S&P 500’s 5.63%, as well as the MSCI World’s 4.45%.
- Given the initial sting of tariffs was first felt by equity markets, the PivotalPath Equity Sector Index was the most impacted of the main indices, falling by 4.3% across March. Directional and sector specialist funds were hit particularly hard, although low net and variable net players also sustained losses.
- The PivotalPath Equity Sector: Technology/Media/Telecom Index was the biggest loser, down 5.4%, while the PivotalPath Equity Sector: Healthcare Index and PivotalPath Equity Sector: Consumer/Retail Index were close behind with a respective 5.0% and 4.8%.
- Tech and consumer sectors were rattled by the treat of overlapping tariffs chilling supply chains and eroding earnings. Healthcare was largely holed by biotech’s concerns around high borrowing costs and the philosophical shift embodied by US Health Secretary, Robert F Kennedy Jr.
- While fundamental equity players were tested, quant equity continued to demonstrate a clean pair of heels, finishing March as the best performing main index. The PivotalPath Equity Quant Index was up 1.5% across the month, making for a YTD of 4.3%, as the cohort showed how their fast-paced adaptability can make the most of volatile markets.
- Macro managers also continued a run of good performance as they navigated a slew of global policy shifts, with a number benefiting from March’s weakening USD and US equity market. The PivotalPath Global Macro: Discretionary Index was up 1.2% in March and 3.7% YTD.
2025 Hedge Fund Performance
Strategy Highlights:
Fundamental equity hedge funds struggled, multi- strats remained muted, while macro, equity quant, and vol strategies proved their worth.
- Multi-Strat managers paid for over-crowding and high leverage, finishing the month down after a period of rapid de-risking and even forced selling via margin calls. The PivotalPath Multi-Strategy Index finished March 0.8%, a print below the space’s own high standards, but significantly better than major markets as the sector’s risk management clicked into gear.
- While a series of strategies lost ground, volatility players demonstrated their worth during times of crises. Over a rough month when the PivotalPath Composite Index was down 1% and a Q1 where the VIX spiked by almost 30%, the PivotalPath Volatility Trading Index was up 0.9%, making for a YTD of 2.0%.
- Equity players labored across a month that paid little respect to a manager’s focus or net exposure. However, the PivotalPath Equity Sector Index’s 4.3% fails to present a nuanced picture of the global dispersion that characterized the month. US-focused funds were hurt the most versus ROW, with the PivotalPath Equity Diversified: U.S. Long/Short Index’s 3.4%, falling behind the Europe Long/Short Index’s 1.8% and the Asia Long/Short Index’s 1.1%.
A new era of light touch regulation and falling interest rates was expected to see biotech funds return to winning ways in 2025. Instead, a combination of ideology and sticky inflation is placing downward pressure on the space.
While the problems of tech in March made the headlines, biotech was also hit hard by a combination of policy and economics.
Across the month the PivotalPath Equity Sector: Healthcare Index declined 5.0% and was only underperformed by the PivotalPath Equity Sector: Technology/Media/Telecom Index’s fall of 5.4%. In addition, the most significant struggler of the US equity sectors tracked by PivotalPath in March was the SPDR S&P Biotech ETF (XBI), which declined 8.58%, making for a YTD of 9.95%.
Biotech has had its early hopes of a resurgent 2025 so far dashed as the philosophical shift represented by the current US administration and early changes at the FDA moved from a reliance on biotech innovation, particularly around GLP-1s and furthering mRNA vaccine technology as a cancer treatment, into a direction more focused on the wellness space.
Combine this shift with sticky inflation and ongoing high borrowing costs – the outlook for a sector that is perpetually cash hungry has darkened from the start of the year, which assumed that falling interest rates, new therapies and even slackening regulation would propel the space forward in 2025.
Read the full report here by PivotalPath
