01/
Markets absorbed significant policy and political shock without breaking.
Resilience was real but uneven, AI-driven investment vs. deteriorating household affordability.
Volatility fell despite elevated uncertainty.
02/
The economy has settled into a pronounced K-shaped structure.
AI is a double-edged driver.
Policy has turned accommodative despite inflation above target.
03/
Recovery driven by rotation - concentration eases and earnings growth broadening.
Global conditions more supportive, potentially expanding opportunities beyond U.S. large caps.
Bond markets will likely determine the recovery’s durability.
Markets absorbed significant policy and political shock without breaking, as tariff uncertainty, regulatory shifts, and geopolitical noise failed to derail growth or risk assets.
Resilience was real but uneven, with AI-driven investment supporting markets while households faced rising costs and deteriorating affordability.
Volatility fell despite elevated uncertainty, suggesting investors learned to live with disruption rather than demand resolution.
The economy has settled into a pronounced K-shaped structure, benefiting asset holders and large corporations while lower-income households and younger workers face weaker labour conditions.
AI is a double-edged driver, boosting productivity and margins while reducing hiring and widening labour-market divergence.
Policy has turned accommodative despite inflation above target, reflecting fiscal dominance and a willingness to support employment growth at the expense of higher long-term inflation risk.
Recovery is emerging through rotation, as extreme market concentration eases and earnings growth is poised to broaden beyond mega-cap leaders.
This shift need not be disorderly, with history showing leadership can rotate through the passage of time and valuation compression rather than market breaks.
Global conditions are turning more supportive, potentially expanding opportunities beyond U.S. large caps.
At the same time, we note that positioning is extended and consensus is growing around the broadening recovery thesis. Near-term data disappointments around growth and/or inflation could trigger a market set-back and may provide a better entry point.
We view bond markets as the gatekeepers here, with the 2026 recovery and rotation thesis depending on continued bond-market cooperation amid above-target inflation and rising fiscal dominance. Policy credibility is being tested as an unconventional easing cycle, growing political influence over central banking, and heavy debt issuance raise the risk of higher term premia and tighter financial conditions.
As of December 31, 2025 (%) | 1M | 3M | 6M | 1YR | 3YR* | 5YR* | 10YR* | Since Inception* | Inception Date |
PICTON Global Equity Fund (CI. F) | -1.51 | 0.69 | 7.44 | 16.67 | 20.27 | 13.32 | 11.01 | 10.90 | (2015-10-29) |
PICTON Long Short Equity 130/30 Alternative Fund (CI. F) | 1.31 | 4.94 | 15.76 | 26.00 | 21.77 | 16.30 | — | 15.51 | (2018-09-27) |
PICTON Market Neutral Equity Alternative Fund (CI. F) | 0.55 | 1.51 | 2.72 | 5.29 | 7.59 | 6.87 | — | 7.81 | (2018-09-27) |
PICTON Long Short Equity Alternative Fund (CI. F) | 0.77 | 2.92 | 7.90 | 13.56 | 13.23 | 11.58 | — | 14.84 | (2020-07-08) |
(*) Annualized performance.
Source: Picton Mahoney Asset Management
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