Pivotal Point of View – July 2025

PivotalPath’s main strategy indices experienced a clean sweep of positive performance in June, as equity markets impressed and ongoing macro dispersion provided opportunities in rates, FX and commodities.

• June largely continued May’s renewed optimism. PivotalPath saw equity specialists rotate from fear-driven trades to more fundamentals-focused positioning, bolstered by mostly stable economic data and a range of strong corporate earnings.
  • This approach drove PivotalPath Equity Sector Index returns of 3.1% in June, making for a YTD of 1.6%. After a volatile start to the year, hedge fund equity strategies returned 7% in Q2.
  • The PivotalPath Composite Index was up 1.8% across the month, making for a YTD of 3.8%.
• This sector-wide upswing in performance saw hedge funds ratcheting up risk appetites, with net exposures ticking higher.
• The ‘shape’ of the risk taking also evolved, with funds leaning harder into growth and momentum (until a momentum unwind on the 1 July!), selectively rotating into quality cyclicals, and trimming short books in sectors previously deemed vulnerable.
  • ‘Trimming’ is the operative word, as managers spoken to by PivotalPath showed little appetite to cover shorts in a significant way, despite a market rebound from early April lows. Confidence has returned, but funds remain cautious about the “volatility to come”.
• Leverage remained near year-to-date highs, and gross exposures also climbed, though most managers have stayed disciplined, deploying more capital into idiosyncratic trades rather than chasing beta.
  • This has helped dispersion pick up, particularly in tech and biotech, where single-name opportunities have begun to outperform broad index bets.