The Pivotal Point of View Commentary
• Most everything went up in August. From all of PivotalPath’s broad hedge fund indices, to many global equity indices along with most of the sectors that comprise them, to notable risk factors including growth and value. In fact, both PivotalPath’s U.S. Cyclical Sectors Basket AND U.S. Growth Sectors Basket generated positive returns of 1.5% and 2.6% respectively.
•Equity Sector Index in focus:
•As mentioned above, the Equity Sector Index generated strong overall returns of 2.2% in August. Of note, each of the sub-indices contributed positively; consistency has been quite rare in the battle between value focused sectors such as Financials, Consumer and Energy, relative to growth-oriented sectors in Healthcare and Technology.
•Energy: Even with Crude Oil losing 7.4% in August, the hedge funds that trade it in the Energy / Utilities / Industrials Index still managed to generate a positive return of 1.7%.
•Healthcare: There was some notable dispersion within the Healthcare Index, (60% higher than its ten year monthly average). The upper quartile of managers produced 5.2%, while the bottom quartile lost only 1.6%. This dispersion can be explained by those managers focused on mid- and large-cap biotech as the S&P Biotech (XBI) gained 7.7% on the month on the heals of formal FDA approval of Pfizer’s Covid vaccine, compared to those more focused on small-cap biotech, as exemplified by PivotalPath’s Small Cap Biotech Basket which fell ~8%.
•TMT: The Technology/Media/Telecom Index returned 2.4%, even as our Social Distance Winners Basket fell 2% (though is still up 15.5% YTD). Strong returns from PivotalPath’s FAANG Basket (+6%) and SaaS Basket (+4%) helped lead the long bets higher.