After the disaster for equity markets in 2022, calendar 2023 saw investors return to rewarding robust fundamentals, but only for a very narrow band of companies. Perhaps it was the fear of further rate rises or the fear of recession, but investors concentrated their bets on only the most liquid securities, those of mega cap companies.

One of the things that characterises sophisticated investors is the way they use investment strategies that are designed to produce returns uncorrelated with equity market returns. These strategies include market neutral strategies, which are designed to profit from both increasing and decreasing prices in one or more markets, while also avoiding systemic market risk.

Over the past few weeks we have had the pleasure of meeting with clients and friends of the firm around Australia and New Zealand. We are fortunate to have such sophisticated advisers and investors as clients. It makes our discussions detailed and insightful. One subject of interest recently was the performance drivers of, and expectations for, long/short funds.