Brummer Multi-Strategy commentary 2024
The portfolio management team reviews last year's performance and discusses challenges and opportunities as Brummer Multi-Strategy continues its 23rd year of generating alpha.
Below is an executive summary. To read the commentary in full, click here.
Executive summary
Return of 2024
Brummer Multi-Strategy (BMS) demonstrated strong performance, with the BMS AIF at 9.3 %*, BMS Cayman at 13.9 % and BMS UCITS at 16.7 %, all in USD. Importantly, the majority of these returns were attributed to alpha, both long and short, underscoring BMS’s role in providing genuine diversification. Unlike many investments where returns may be heavily beta-driven, BMS’s focus on alpha ensures that it complements traditional investments by mitigating market-driven volatility and enhancing portfolio resilience, evidenced by a maximum drawdown during the year of one percent for the unlevered BMS.
Main performance drivers
The primary performance drivers for 2024 were the long/short equity strategies, which accounted for 60-70 % of the total risk and generated the majority of the fund’s return. The returns in the long/short equity book were largely attributed to alpha or stock-specific sources of risk, with short alpha also playing a significant role. Noteworthy sectors included market-neutral strategies in US TMT, European financials, and healthcare. Meanwhile, systematic trend following faced challenges, detracting 2% from the overall returns in a choppy market environment with weak trends.
Enhancements to the Multi-Strategy fund
In 2024, BMS made significant enhancements. Two new senior partners, Adrian Brummer and Wilhelm Kleman, joined the team, bringing valuable experience and catalysing a long-term growth direction. Investments in infrastructure included the launch of Brummer Multi-Manager Fund Ltd, which improved the onboarding process for new investment teams as 'pods'. This strengthened infrastructure allowed for the addition of new complementing strategies. Four market neutral long/short equity strategies were launched, and a fixed income strategy is set to debut in 2025.
Looking ahead
As we look ahead, numerous global uncertainties demand caution. Geopolitical tensions, political crises, and the uncertainty regarding central bank policies, particularly the risk of rate hikes in a reflationary scenario, are significant concerns. Additionally, many developed economies face high debt burdens and budget deficits, limiting fiscal policy options and increasing market vulnerability. Despite these challenges, there’s optimism about increased mergers and acquisitions, spurred by policy shifts under the Trump administration and lower interest rates. However, this enthusiasm may overlook the elevated U.S. stock valuations reminiscent of the dot-com era, signaling potential volatility and limited upside.
In this complex landscape, Brummer Multi-Strategy maintains a liquid and nimble portfolio that is market-neutral and diversified across strategies, sectors, and geographies. This strategic approach is crucial for navigating both optimism and pronounced tail risks, enabling consistent alpha generation in varying market conditions.
We thank you for your continued trust and welcome any questions you may have at info@brummer.se.
*Yearly performance is for a part of 2024 calculated using the BMS AIF SEK class adjusted for currency hedging. This is due to the fact that the BMS AIF USD share class was launched in August 2024.
This is marketing communication. Please refer to the prospectus and to the KIID/KID of the relevant fund before making any final investment decisions.