Pivotal Point of View – December 2021

The Pivotal Point of View Commentary

  • While the PivotalPath Composite Index (+6.7% YTD) and sub-indices remain broadly positive in 2021, November was difficult across the board, with few positive performers other than Equity Quant. The overall performance in the S&P 500 (-0.69%) and Nasdaq (+0.25%) do not reflect the story for hedge funds in November.

  • PivotalPath’s Equity Sector Indices struggled the most, led by Healthcare (-6.2%), Financials (-3.0%), and TMT (-2.8%).

  • A selloff in biotech (SPDR S&P Biotech ETF -6.85%) helped drive down performance for healthcare funds.

  • Financials were hurt by a rally in the 10-year which fell from 1.56% to 1.45% over the month.

  • Although the Nasdaq and Technology Sector SPDR were up for the month, there were significant selloffs in pockets of TMT, as exemplified by the PivotalPath Mobile Payments Basket and PivotalPath SaaS Basket, which were both down approximately 12% on the month.

  • There was also a large dispersion in small cap vs. large cap, as the Russel 2000 fell 4.28%, 360 basis points more than the S&P 500.

  • Notably, Energy Sector funds hung in quite well, losing only 0.4% in the face of significant losses in Crude Oil and Nat Gas futures which lost ~21% and ~16% respectively. The index remains is still up 14.7% YTD, just below Financials (+15.6% YTD).

  • PivotalPath’s Social Distance Winners Basket (think Peloton, Zoom, Activision) and Social Distance Losers Basket (think Carnival, Royal Caribbean and Cinemark) were both down significantly, falling 13.9% and 11.2% respectively.

  • Since March of 2020, the battle between these opposing factors have helped capture the markets’ sentiment on Covid. A significant sell-off in both suggests even greater issues at play.

  • PivotalPath’s Equity Quant Index continues to quietly put together a stellar year. As one of the only bright spots in November, it generated positive returns of 3.0% and is up 12.6%, a top quartile index performance in 2021. This is a notable bounce back from difficult performance over the last 1-, 3-, and 5-year periods prior to 2021.

  • Multi-Strat as represented by the PivotalPath Multi-Strategy Index generated a rare loss of 0.8% on the month though still +8.5% YTD.More impressively, the bulk of their returns continue to come in the form of alpha relative to the S&P 500, and relative to most factors, for that matter



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