Strategic Analysis Map by Kettera - March 2020
During March 2025, the performance of various investment strategies relative to equities markets and volatility was mixed, with distinct outcomes for discretionary, systematic, and AI-driven approaches.
Quantitative Strategies and Systematic Trend Programs
Quantitative strategies showed a wide range of results. On an asset-weighted basis, quant strategies were the top performers in Q1 2025, returning approximately 2.4%, but equally weighted quant strategy returns were much lower at about 0.1%. This indicates that certain quant sub-strategies, possibly including systematic trend programs, performed well in this period, especially as quant and macro strategies were among the strongest performing in Q1 2025, following weaker returns in 2024.
Discretionary Commodities Managers
While specific March performance for discretionary commodities managers is not isolated, commodities markets experienced volatility. The industrial metals sector improved, suggesting some pockets of strength, while the commodities and energy sectors were downgraded from favorable to neutral as of mid-2025, indicating challenges and profit-taking during the early year periods including March.
Discretionary Global Macro Strategies
Macro strategies were among the best performers in Q1 2025, recovering from a tough 2024, with positive contributions likely benefiting from volatility and changing market conditions. The volatile corporate bond market in March, driven by trade policy uncertainties, could have created opportunities for discretionary global macro managers who exploit macroeconomic shifts.
Equities Strategies
Equity long/short (L/S) strategies underperformed in Q1 2025, returning about -1.7%, marking them as the weakest strategy area during this period. This underperformance coincides with a challenging equities environment marked by market uncertainty and volatility.
AI and Machine Learning-Based Strategies
While exact March returns are not detailed, the broader investment and venture capital landscape showed resilience and growth in AI-related sectors through 2025. AI-driven investments and tech-focused strategies contributed to strong equity performance in the U.S., and AI remained a bright spot supporting a recovery narrative.
However, most AI and machine learning-based strategies did not perform well in March, as they struggled to adapt to the unprecedented event and its unusual speed and reactions.
Highlighted Strategies
- Long convexity and relative value volatility strategies on Hydra and off exceeded all expectations, posting their best month since inception.
- Systematic trend programs generally offered mixed returns, with positive returns mostly in the fixed income, short term rates, and energy sectors.
- A blend of the BarclayHedge Equity Market Neutral Index with Eurekahedge Equity Mkt Neutral Index was mentioned.
- Many discretionary global macro strategies redeemed themselves in March as they profited from multiple themes, including being short base metals and energy, and long US fixed income.
- Many discretionary commodities managers, particularly those focused on energy and industrial commodities, excelled during the month by correctly calling the collapse in these markets.
In summary, systematic and macro-oriented strategies, including quant and global macro, tended to outperform equities strategies in March 2025 and Q1 overall, benefiting from volatility and shifting macro conditions. Discretionary commodities managers faced a mixed environment with sector rotations, while equity long/short managers struggled. AI and machine learning strategies remained a growth area indirectly supporting strong tech-related equity segments. This indicates a landscape where strategies exploiting volatility and macro trends outperformed traditional equity-focused approaches during March 2025.
[1] "Q1 2025 Performance Review: Hedge Funds", AlphaWeek, link
[2] "Global Macro Strategies Shine in Q1 2025", The Sortino Group, link
[3] "Commodities: A Mixed Bag in Q1 2025", The Sortino Group, link
[4] "AI and Machine Learning in Hedge Funds: A Bright Spot in Q1 2025", The Sortino Group, link
All Rights Reserved for the publication by The Sortino Group Ltd. The views expressed in the article are those of the author and do not necessarily reflect the views of AlphaWeek or The Sortino Group.
Sports can provide an interesting analogy for investment strategies, as both require understanding, adaptability, and the ability to respond to changing conditions. Similarly to how sports teams might utilize different strategies to capitalize on a shifting game landscape, investors can benefit from quantitative strategies, systematic trend programs, and discretionary global macro strategies that exploit volatility and macro trends, as demonstrated in the strong Q1 2025 performance of these strategies compared to equities strategies.
