Tactical Analysis by Kettera Strategies - August 2025
In the financial landscape of August, the Hydra Emerging Manager Basket demonstrated a strong performance, with most sectors posting gains. This trend, however, was not without its challenges, particularly for short-term systematic strategies due to fragmented G7 price action and compressed volatility.
Long-term systematic trend strategies, on the other hand, found favour in the trading environment, rewarding the patience of investors. One of the standout trades in the commodities sector was long positions in precious metals, particularly gold and silver, which proved to be consistent profit centers for several tracked managers.
The performance of Discretionary Global Macro managers was generally positive, with many profits from trades in metals, rates, and certain currencies. Macro-driven discretionary programs fared somewhat better, although performance was still mixed.
Weightings in the Hydra Emerging Manager Basket are not discretionary, and they remain equal for any approval category. The basket rebalances weightings annually, with exceptions for extraordinary events. Manager weightings are not increased over time except for going from a "pending" to a fully "approved" program.
Weightings reductions only occur if the manager is de-listed or shuts its doors. Interestingly, in August 2025, specific firm names that belonged to the category "Commodities Specialists - Agricultural Traders" on the Hydra platform and showed negative performance are not explicitly detailed in the available search results. The data notes that agricultural funds, mostly discretionary, generally faced a challenging month in that category, implying some negative performance, but without naming particular companies.
Energy and equity exposures appeared minimal or neutral for most managers. Some managers were hurt by long exposure to the long end of some European yield curves, which sold off sharply amid rising fiscal concerns. Conversely, short U.S. dollar exposure via long GBP positions (as well as some commodity-focused currencies) contributed positively for some funds.
Long equities outperformed as indices rose in the US, Asia, and slightly in Europe. Indices and financial benchmarks in the Hydra Emerging Manager Basket are provided for illustrative purposes only. It's important to note that past performance is not necessarily indicative of future returns in the Hydra Emerging Manager Basket.
The Hydra Emerging Manager Basket uses various benchmarks for comparison, including the With Intelligence Systematic Macro Hedge Fund Index, the With Intelligence Macro Hedge Fund Index, and the Societe Generale Trend CTA Index. Currency Specialists, both discretionary fundamental and systematic FX managers, struggled in August amid tight trading ranges, dislocated correlations, and a lack of sustained directional follow-through.
In conclusion, August was a month that tested the resilience of various investment strategies. Despite the challenges faced by some sectors, the long-term systematic trend and long positions in precious metals and certain currencies emerged as profitable moves for many managers within the Hydra Emerging Manager Basket.
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