Farview's Quarterly Letter
Q1 2025
Overview
Farview Alpha Multistrategy returned 0.52% in March, a month when global equities, as measured by the MSCI World Index, declined by -4.47%, while global fixed income, represented by the Bloomberg Global Aggregate Index, gained 0.62%. For the first quarter of 2025, Farview Alpha Multistrategy delivered a return of 2.51%, compared to -2.07% for the MSCI World and 2.64% for the Bloomberg Global Aggregate. Over the past 12 months, Farview Alpha Multistrategy has returned 5.65%, versus 8.04% for the MSCI World and 3.05% for the Bloomberg Global Aggregate.
Performance Around Liberation Day
On April 2nd, US president Trump announced a new tariff strategy to apply universally to all imports1 as well as country-specific “reciprocal” tariffs, declaring the day “Liberation Day.” The announcement marked the beginning of a global trade war and triggered a global stock market crash. Following Liberation Day, the strategy experienced some impact from heightened market volatility. As of mid-April, Farview Alpha Multistrategy was down approximately 1.2%, compared to a -6% decline in global equities and a 2% gain in global fixed income. While the areas in which the strategy invests are driven by idiosyncratic factors distinct from traditional equities and bonds, they are not immune to periods of broad market stress—particularly during sharp dislocations when cross-asset correlations spike and diversification benefits diminish.
This episode was further complicated by unexpected shifts in macro relationships. Typically, a risk-off environment—marked by falling equity prices and rising rates—would be accompanied by dollar strength. In this case, however, the U.S. dollar depreciated, a notable divergence from past patterns that added to market uncertainty.
Among Farview Alpha’s allocations, macro strategies—both systematic and discretionary—were the fund’s primary detractors. These strategies tend to have a positive exposure to momentum and often underperform during abrupt market reversals. In this instance, the usual counterbalance from fundamental value-based signals was absent, particularly as the market reaction to the proposed tariffs lacked a valuation anchor.
Periods of sharp market dislocation not driven by economic fundamentals often lead to a temporary breakdown in diversification benefits. Correlations across asset classes and strategies tend to rise, impacting not only directional exposures but also alternative risk premia. For example, in merger arbitrage strategies, spreads can widen dramatically as investors question the viability or timing of transactions, even when deal fundamentals remain intact. This was evident during the recent turmoil, when heightened volatility led to indiscriminate de-risking and dislocations across otherwise sound opportunities. While such episodes can negatively impact portfolios in the short term, they also tend to set the stage for attractive forward returns as fundamentals reassert themselves and risk premia normalize. In this sense, market stress can serve as a catalyst for re-pricing and the creation of compelling entry points for strategies with sound economic rationale.
As markets digest new information and fundamentals begin to adjust to the evolving macroeconomic backdrop, we have started to observe signs of recovery from the drawdown. Despite recent volatility, we remain confident in the long-term positioning of the portfolio and do not anticipate making significant changes to our allocations. Staying invested through market turbulence is consistent with our philosophy, which values discipline over reaction. We aim to keep the course—nurturing the strategies that continue to demonstrate resilience and return potential, while maintaining a clear focus on long-term value creation.
Performance highlights during Q1 and some specific insights into April.
Our systematic Global Macro allocation delivered a resilient Q1 return with performance in March flat amid volatile macro conditions. Discretionary macro strategies drove gains, particularly through tactical bond trades in Europe and U.S. mortgage futures, complemented by long positions in commodities. However, losses in quantitative strategies, especially from long U.S. dollar and European equity exposures, offset some of the upside. Discretionary managers navigated the sharp volatility around Liberation Day more effectively, underscoring the benefit of active risk-taking in macro investing.
Our Asia Macro strategy posted positive returns in March and also in Q1, although these figures mask a more turbulent start to April. The fund entered the period with a constructive stance on China, grounded in improving fundamentals, policy stability, and signs of economic reacceleration—positioning that had supported strong gains in 2024. However, the sudden escalation of trade tensions following Trump’s “Liberation Day” tariffs and China’s unprecedented retaliatory measures triggered severe market dislocations. The timing of China’s response—announced on a public holiday in Hong Kong—constrained the fund’s ability to react, leading to material losses, particularly with long Hong Kong and China equity exposures. Stop-losses were activated across the portfolio, resulting in the closure of most long China H/A index positions. Simultaneously, sharp reversals in developed market equities—driven by the unexpected announcement of a 90-day tariff pause—negatively impacted the fund’s short exposure to U.S. and Taiwan equities. Despite these challenges, some downside hedges and short positions helped partially offset losses. The manager has since recalibrated exposures, while continuing to express conviction through long China A-share exposure, which may benefit from policy support.
The allocation to events in Europe posted positive returns in March and had a strong Q1 performance, proving resilient despite equity market declines. The fund’s exposure to European M&A, including successful trades in Banco Sabadell, Alliance Pharma, and Banco Popolare di Sondrio, was a key performance driver. While names like Dowlais Group and Banco BPM detracted, the fund’s low market correlation and targeted deal selection continued to deliver differentiated returns in a challenging environment.
The discretionary market neutral strategy focused on Asia equities had a positive March and a strong Q1 performance resulting in 12-month returns of 12.97%. The strategy benefited from long positions in select Chinese and Indian equities, while a disciplined long/short framework maintained low net exposure. The team continued reallocating risk toward China on expectations of improving earnings trends and structural reform, while stepping back from Indian equities where valuations appeared stretched. The approach remains rooted in high-conviction stock selection across a diversified Asia ex-Japan universe. Month-to-date performance in April is positive despite the increased market volatility in the region.
Our allocation to global to equity market neutral performed well in March, capitalizing on market dislocations through its stock selection model. Four of five proprietary strategies contributed positively, led by Dynamic Valuation and Market Dynamics. North America delivered the strongest regional contribution, with additional gains from China and France. While the fund’s net short in Energy detracted, stock picking in Materials and Consumer Discretionary was notably strong. Both the long and short books contributed to performance, reinforcing the value of its balanced, market-neutral approach.
Our allocation to convertible arbitrage also posted positive returns in March as well as the first quarter, continuing its strong track record of uncorrelated, event-driven returns. Gains during the month were led by idiosyncratic positions such as Coty and ReNew Energy Global, with the former benefitting from improved equity performance and the latter from positive refinancing developments. Convertible arbitrage exposures, including Arcelik and Coherus Biosciences, also contributed positively, while the fund’s equity hedge protected capital during market volatility. Detractors included MicroStrategy and Liberty Interactive bonds, impacted by weak market technicals and new issuance activity. The strategy continues to express its core convictions across hedged credit, special situations, and volatility, with over 125 trading strategies and moderate portfolio duration. With a balanced mix of credit and equity sensitivity and a focus on capital structure mispricings, the Strategy remains positioned to benefit from ongoing dispersion and elevated issuance activity across convertibles and special situations.
Looking ahead
After a strong first quarter for Farview Alpha, heightened geopolitical tensions that culminated in Liberation Day in April have increased global market volatility and proven to be a more challenging environment to navigate. Despite increased market turbulence, we remain committed to the multistrategy approach which has dampened the impact of the market’s whipsaw movements. As we exit the month, we have observed signs of recovery; we remain confident in our positioning and the long-term value creation of the fund.
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A baseline 10% tariff applied universally to imports from all countries with the exception of Canada and Mexico.