
As at June 30, 2025
Alpha Strategy Commentary
01/
In an environment marked by persistent volatility and geopolitical noise, our Alpha strategy continued to deliver uncorrelated returns—reinforcing its role as a core diversifier in a well-constructed portfolio.
02/
We’ve been moving to our strategic weights of an equal contribution to risk across the core component strategies.
03/
The PICTON Multi-Strategy Alpha Alternative Fund Class F returned 1.62% in Q2 2025, with positive contributions from all component strategies indicating the benefit of a multi-strategy approach.
Our 2025 outlook as well as our mid-year 2025 outlook called for a decisive shift toward diversifiers, citing persistent risks across traditional asset classes. We continue to have a strong conviction in this view. Against this backdrop, our Alpha strategy continues to serve as a core component of our 40/30/30 portfolio construction framework, offering investors access to uncorrelated return streams that can help mitigate volatility and reduce reliance on traditional market beta.
The first half of 2025 has been particularly noisy—characterized by the sell-off due to tariff-related uncertainty and subsequent rebound due to the backtracking from initial policy. This market volatility has reinforced the importance of a diversified approach. In addition, a temporary flare-up in middle east hostilities caused volatility in commodity markets. These are uncertain times, and they demand recognition of the role alternative can play in a portfolio. Our approach of assembling resilient, independent return streams has proven effective in navigating this landscape.
Notably, different underlying strategies have contributed to performance at different times—underscoring the foundational case for diversification within alternatives.
The portfolio allocations have been moving towards our strategic allocation of an equal contribution to risk across the core strategies. We believe that each of the Market Neutral Equity, Long-Short Credit, and more recently, the Arbitrage strategy all offer attractive risk/reward dynamics.
We believe it is best to balance alpha sources in a fluid market environment in which we continue to overweight diversifiers within our alternative allocation.
Regarding hedging, our Alpha strategy maintains a constant allocation to market “tail risk” hedges. During this period, we did not feel the need to materially increase those exposures, as the underlying strategies have been, for the most part, immune to the tariff and geopolitical uncertainty expressed in markets.
For investors new to alternatives or building exposure gradually, we continue to view this strategy as a strong foundational piece of the alternative sleeve in a well-diversified portfolio. A progressive allocation approach may help investors optimize risk/return trade-offs in the context of their broader holdings.
The PICTON Multi-Strategy Alpha Alternative Fund Class F (“the Fund”) produced a return of 1.62% in Q2 and 2.62% in the first half of 2025, delivering performance in line with expectations, with low realized volatility and steady return contribution through a turbulent quarter.
Market Neutral Equity strategy was the largest contributor in the quarter. The strategy benefited from positive stock selection in Financials and Energy sectors, as did the overweight in Industrials and Financials sectors. Underweight exposure to Consumer Staples and Consumer Discretionary sectors slightly hindered the relative performance.
Arbitrage strategy continued to be a consistent positive contributor during the period, reinforcing its role as a stabilizer in volatile markets. Special Purpose Acquisition Company (SPAC) arbitrage was the strongest contributor in Q2, driven by enthusiasm around high-profile de-SPAC announcements. SPAC issuance also picked up meaningfully - allowing the strategy to deploy more capital. Merger arbitrage benefited from regulatory easing and unique deal structures. The strategy also capitalized on attractive deal structures like subscription receipts, which generally offer favorable risk/reward when paired with common share shorts.
Allocation to the Long-Short Credit strategy also contributed positively to performance. The event-driven component of the portfolios was a solid contributor during the period, as we saw some idiosyncratic catalysts take place leading to positive performance. Our allocation to various capital structure opportunities such as limited recourse capital notes, hybrid securities, and synthetic risk transfers collectively performed well during the period and provided stability to the portfolios. Shorts and hedges collectively detracted from absolute performance during the period but achieved their goal within the portfolios of dampening volatility and lowering market beta.
As of June 30, 2025 (%) | 1M | 3M | 6M | 1YR | 3YRS | Since Inception* |
PICTON Multi-Strategy Alpha Alternative Fund (F) | 0.22 | 1.62 | 2.62 | 8.77 | 8.45 | 7.41 (2022-05-03) |
(*) refers to average annualized performance.
Disclosure
This material has been published by Picton Mahoney Asset Management (“PMAM”) as at July 14, 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.
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