L1 Capital Outperforms ASX With +13.3% Q3 Surge and +28.7% YTD Return [In-Depth]

L1 Capital disclosed its Q3 results for the long-short fund, which generated +13.3% during the quarter. It outperformed the ASX200AI Index, which trailed with +4.7% quarterly gains. Year-to-date figures rose to +28.7%. This performance is also significantly higher than the +11.5% that the index generated. Annually, in the last five years Equity Long-Short fund returned +22%.

In the letter, the hedge fund managers discussed the overall market outlook, with a focus on equities and commodities, and on portfolio performance. Also, the letter shed more light on the Uranium sector and one company an example from the fund's portfolio.

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Market Outlook

On a global scale, equity markets rose during the quarter. They were boosted by a dovish Fed policy supporting lower interest rates, strong U.S. earnings, and the continuation of a high investment level in the AI sector. The new data indicated lower employment data, and in response Fed lowered the rates by 25 bps. The markets are expecting an additional 50 bps cut in 2025, while the initial expectations were another 25 bps.

Despite lower corporate earnings, combined with an overall decline in the growth outlook, the ASX200AI still managed to rise by +4.7%. In contrast to the Fed and its dovish outlook, the Bank of Australia took a more hawkish perspective. It was triggered by a slower-than-expected decline in underlying inflation coupled with an increase in consumption growth.