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Key Takeaways
01/
Diversification delivered
Within our Multi-Strategy portfolios, alternatives were the notable contributors in Q1, validating the importance of uncorrelated return streams within our 40/30/30 framework.
02/
Defensive shift underway
We’ve reduced equity beta and increased fixed income exposure as markets grapple with volatility, valuation risk, and macro uncertainty.
03/
Inflation strategy held its ground
Despite commodity weakness, disciplined trend-based exposure and capital-efficient options helped preserve capital while retaining upside potential.
Manager Perspective & Outlook
The first quarter of 2025 reinforced our conviction in the value of diversification within portfolio construction. Within our 40/30/30 framework—40% equities, 30% fixed income, and 30% alternatives—we remained cautious on traditional beta exposures and emphasized the importance of diversifiers to help mitigate volatility and manage uncertainty.
Persistent inflation risks and renewed trade tensions—particularly the market’s pricing of a potential Trump 2.0 policy regime—underscored our inflation-sensitive positioning. Meanwhile, increased correlation across asset classes and growing geopolitical uncertainty highlighted the need to avoid concentrated directional bets and rely instead on data-driven, flexible strategies that can dynamically adapt.
As we look ahead to Q2, our outlook tilts more defensively:
- Equities: Shifting from neutral to underweight, we believe exposures to equities should have been down-shifting beta exposure, which we have been progressively doing by virtue of rotating long-short equity allocations into market neutral allocations.
- Fixed Income: an increase in allocation from underweight to neutral. The inflation impulse has moderated, and with yields stabilizing, bonds look more investable for the first time in some time, particularly as capital rotates out of overextended equity exposures.
- Alternatives: Continue to be our highest-conviction area. Diversifiers and inflation-oriented strategies remain critical for navigating volatile and policy-sensitive markets.
Portfolio Positioning
We continue to emphasize alternatives as key diversifiers. Within our Inflation strategy, trend signals were relatively neutral in Q1, leading us to maintain portfolio exposure below long-term strategic targets. This caution served us well—our strategy was effective in mitigating downside participation during the commodity sell-off after President Trump announced a slew of reciprocal tariffs. We dialed down our portfolio exposure to help weather heightened volatility. We’ve implemented more capital-efficient upside exposure using options on liquid commodities like copper and oil — enhancing upside participation with limited capital at risk.
Our equity position entering the year was neutral, with a bias toward ex-U.S. exposures given valuation concerns and high concentration risk in U.S. markets. This view proved beneficial, as international equities outperformed U.S. peers. Heading into Q2, we’ve moved from neutral to underweight within the equities. Beta exposure has been reduced, and we’ve tilted more heavily toward market neutral strategies that are better positioned to benefit from heightened dispersion and lower market directionality.
Within fixed income, we began the year underweight due to inflation concerns and tight credit spreads. As trade tensions escalated and global growth concerns intensified, bond yields fell—partially offsetting our positioning. For Q2, we’ve shifted to a more neutral position. With inflation momentum waning and rate volatility becoming a larger concern, we view high-quality active fixed income strategies are increasingly attractive for navigating both interest rate and credit risk.
Performance Highlights
Unsurprisingly, alternatives were the most resilient component of the portfolio in Q1, particularly strategies that focused on mitigating inflation risk and uncorrelated returns. Within our Inflation strategy, we successfully limited downside participation during the commodity sell-off.
Within our equities exposure, our caution toward broad market exposure, and preference for non-U.S. equities, proved well-timed. The rotation into market-neutral strategies also helped reduce beta exposure ahead of growing equity volatility.
Fixed income played a stabilizing role as yields fell. Our preference for active managers navigating rate and spread risk added value in an increasingly complex bond environment.
| As of March 31, 2025 (%) | 1M (%) | 3M (%) | 6M (%) | 1YR (%) | 3YR* (%) | 5YR* (%) | Since Inception* (%) | Inception Date |
| Picton Mahoney Fortified Multi-Asset Fund (Class F) | -1.14 | 1.37 | 3.92 | 10.99 | 6.75 | 10.26 | 7.49 | (2015-10-29) |
| Picton Mahoney Fortified Multi-Strategy Alternative Fund (Class F) | -0.12 | 3.56 | 2.74 | 9.99 | 2.96 | 8.83 | 5.44 | (2018-09-27) |
| Picton Mahoney Fortified Inflation Opportunities Alternative Fund (Class F) | 1.81 | 1.47 | 2.53 | 4.81 | – | — | 5.84 | (2023-05-04) |
(*) Annualized performance.
Source: Picton Mahoney Asset Management
This material has been published by Picton Mahoney Asset Management (“PMAM”) as at April 22, 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.
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