Fixed Income Commentary: As at December 31, 2024

Published: January 13, 2025
Author: Fixed Income Team

During the fourth quarter of 2024, interest rates rose sharply despite aggressive rate cuts by global central banks. Yield curves steepened as the market re-assessed inflation risk and started to rebuild its historical term premium. The re-election of Donald Trump and the December Federal Open Market Committee meeting were two key catalysts driving longer term yields higher.

Credit spreads remain at the bottom of their recent ranges, driven partly by continued inflows to the asset class and yields that are sufficiently attractive to larger pension plans and annuities. Defaults remain low, and issuers continue to have easy access to capital with very strong corporate issuance during the quarter.

With lingering inflation risk, and the market beginning to focus more on fiscal deficits globally, we see challenging risk/reward in long duration bonds. While credit fundamentals and technicals remain healthy, current spread levels leave investors with very little margin of safety.

With this macro backdrop, we believe investors are best served by an active long/short investment strategy that can cushion against market volatility and higher interest rates. Our team continues to focus on finding event-driven situations to drive uncorrelated alpha and we’ve been adding to credit shorts and hedges to further reduce our market beta.

 

As of December 31, 2024 (%) 1M (%) 3M (%) 6M (%) 1YR (%) 3YR (%)* 5YR (%)* Since Inception
Picton Mahoney Fortified Income Fund Cl. F 0.36 1.35 4.43 8.57 3.15 3.94 5.27 (Oct 29, 2015)
Picton Mahoney Fortified Income Alternative Fund Cl. F 0.55 1.47 3.74 7.46 3.53 4.60 4.86 (July 10, 2019)
Picton Mahoney Fortified Special Situations Alternative Fund Cl. F 0.43 1.66 4.32 8.92 4.81 3.93 (July 13, 2021)

This material has been published by Picton Mahoney Asset Management (“PMAM”) as at January 13, 2025. It is provided as a general source of information, is subject to change without notification and should not be construed as investment advice. This material should not be relied upon for any investment decision and is not a recommendation, solicitation or offering of any security in any jurisdiction. The information contained in this material has been obtained from sources believed reliable, however, the accuracy and/or completeness of the information is not guaranteed by PMAM, nor does PMAM assume any responsibility or liability whatsoever. All investments involve risk and may lose value.  This information is not intended to provide financial, investment, tax, legal or accounting advice specific to any person, and should not be relied upon in that regard.  Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.

This material may contain “forward-looking information” that is not purely historical in nature. These forward-looking statements are based upon the reasonable beliefs of PMAM as of the date they are made. PMAM assumes no duty, and does not undertake, to update any forward-looking statement. Forward-looking statements are not guarantees of future performance, are subject to numerous assumptions and involve inherent risks and uncertainties about general economic factors which change over time. There is no guarantee that any forward-looking statements will come to pass. We caution you not to place undue reliance on these statements, as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made.

Commissions, trailing commissions, management fees, performance fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Alternative mutual funds can only be purchased through a registered dealer and are available only in those jurisdictions where they may be lawfully offered for sale.

There is no guarantee that a hedging strategy will be effective or achieve its intended effect. The use of derivatives or short selling carries several risks which may restrict a strategy in realizing its profits, limiting its losses, or, which cause a strategy to realize or magnify losses. There may additional costs and expenses associated with the use of derivatives and short selling in a hedging strategy.

This material is confidential and is intended for use by accredited investors or permitted clients in Canada only. Any review, re-transmission, dissemination or other use of this information by persons or entities other than the intended recipient is prohibited.

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© 2025 Picton Mahoney Asset Management. All rights reserved

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This material has been published by Picton Mahoney Asset Management (“PMAM”) on January 13, 2025

It is provided as a general source of information, is subject to change without notification and should not be construed as investment advice. This material should not be relied upon for any investment decision and is not a recommendation, solicitation or offering of any security in any jurisdiction. The information contained in this material has been obtained from sources believed reliable, however, the accuracy and/or completeness of the information is not guaranteed by PMAM, nor does PMAM assume any responsibility or liability whatsoever. All investments involve risk and may lose value. This information is not intended to provide financial, investment, tax, legal or accounting advice specific to any person, and should not be relied upon in that regard. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.

This material may contain “forward-looking information” that is not purely historical in nature. These forward-looking statements are based upon the reasonable beliefs of PMAM as of the date they are made. PMAM assumes no duty, and does not undertake, to update any forward-looking statement. Forward-looking statements are not guarantees of future performance, are subject to numerous assumptions and involve inherent risks and uncertainties about general economic factors which change over time. There is no guarantee that any forward-looking statements will come to pass. We caution you not to place undue reliance on these statements, as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made.

Commissions, trailing commissions, management fees, performance fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Alternative mutual funds can only be purchased through a registered dealer and are available only in those jurisdictions where they may be lawfully offered for sale.

There is no guarantee that a hedging strategy will be effective or achieve its intended effect. The use of derivatives or short selling carries several risks which may restrict a strategy in realizing its profits, limiting its losses, or, which cause a strategy to realize or magnify losses. There may additional costs and expenses associated with the use of derivatives and short selling in a hedging strategy.

This material is confidential and is intended for use by accredited investors or permitted clients in Canada only. Any review, re-transmission, dissemination or other use of this information by persons or entities other than the intended recipient is prohibited.

© 2024 Picton Mahoney Asset Management. All rights reserved.