Unified Global Alternatives – Hedge Fund Bulletin

Global markets delivered mixed results in November, shaped by divisions within the Federal Reserve regarding upcoming policy moves, concerns about a US government shutdown, and shifting leadership from momentum and AI/technology stocks. US equities: Dow Jones +0.32%, S&P 500 +0.13%, NASDAQ -1.51%. Europe: MSCI Europe +0.75%, FTSE +0.02%, DAX -0.51%. Asia DM: Nikkei 225 -4.12%, underperforming relative to other regions. Emerging Markets: Brazil +6.37%, India +2.11%, China -1.67%, reflecting divergent performance. Rates/credit: US 2Y Treasury fell to 3.49% (from 3.58%); US 10Y to 4.02% (from 4.08%). Barclays US IG +0.65%, HY +0.58%. Commodities/FX: Gold +5.6%, oil -3.4%. EUR little changed (1.1607 → 1.1601); USD +1.29% vs JPY (154.04 → 156.03).

Equity Hedge: Most US managers delivered mixed results, with the healthcare sector outperforming, while technology was the largest laggard. Europe traded mostly negative, driven by headwinds in industrials and communication services; APAC showed mixed returns, with the more AI-exposed Nikkei down and the Chinese market experiencing some volatility despite no major negative news.

Relative Value / Event Driven: Fixed income, merger arbitrage, and quantitative equity strategies performed well, while capital structure/volatility arbitrage saw losses. Agency MBS returns were flat overall. Technical models and macro themes contributed positively, despite some factor headwinds and spread widening.

Credit / Income: Corporate, ABS, and reinsurance strategies generated gains, with dispersion and interest income driving results.

Trading / Macro: Discretionary strategies were mixed, with gains in rates and metals but equity and FX losses. Systematic trading, especially trend-following, performed strongly.

Dispersion: Equity hedged strategies saw varied returns, with sectors and regions diverging, biotechnology leading, technology lagging.

In Asian markets diversified strategies outperformed, while concentrated AI exposures and weak macro data weighed on overall returns.

Strong fixed income and quantitative equity performance, while event-driven and MBS strategies showed mixed results.

Market volatility and spread widening presented challenges, but diversified strategies helped maintain positive momentum across credit sectors.

Interest rate gains boosted returns, while equity exposures and certain emerging market FX positions weighed on results.

Performance snapshot

Overall market commentary

Risk assets produced broadly mixed performance in November. Overall results were driven by emerging division within the US Federal Reserve regarding near term policy action, overhang from the US government shutdown, as well as headwinds surrounding momentum factors and AI / technology leadership. The Dow Jones Industrials and S&P500 posted modestly positive performance of 0.32% and 0.13%, respectively, while the NASDAQ posted a loss of -1.51%. The European indices also generated mixed performance with the MSCI Europe producing a gain of 0.75%. Conversely, the DAX produced a loss of -0.51%, while the FTSE was essentially flat at 0.02%. Asian developed markets produced negative results with the Nikkei 225 generating a loss of 4.12%. Emerging market indices also produced mixed performance in November. Brazilian and Indian markets rallied 6.37% and 2.11%, respectively, while the Chinese market detracted 1.67%. US interest rate markets were modestly stronger given weak employment data and market forecasts still expecting a December rate cut from the US Federal Reserve. The two-year US Treasury yield fell to 3.49% from 3.58% and the ten-year US Treasury yield decreased to 4.02% from 4.08%. The Barclays US Corporate Investment Grade Index rallied 0.65% and the Barclays US Corporate High Yield Index gained 0.58% on the back of falling yields. Commodity prices were again mixed in November with gold rising 5.6% on the back of strong inflows. Conversely, oil fell 3.4% due to concerns of a slowing global economy. In currency markets, the Euro was little changed, easing to 1.1601 from 1.1607, while the US dollar rose 1.29% against the Japanese Yen from 154.04 to 156.03.

Source returns: UBS World Market Report. As of November 30, 2025. Historical performance indications and financial market scenarios are not reliable indicators of future performance.

US Equity Hedged strategies generated mixed returns in November. Performance was uneven with directional biotechnology managers featuring the strongest results, while technology and energy focused managers generally underperformed. Most of November continued the recent theme of trading counter to typical seasonal trends as markets tended to be challenged until the final week. It was another month of large factor moves with a rotation from growth to value names, while the realized volatility and momentum factors weakened. Overall, most sectors ended the month in positive territory. The healthcare sector outperformed, while technology was the largest laggard as investors voiced further concerns about AI capital expenditures spending and potential bubble fears. Alpha at the industry level appears to have been slightly positive, driven primarily from the short side, although with substantial dispersion across managers.

European Equity Hedged strategies generally produced negative performance in November. Performance was primarily driven by headwinds in industrials, communication services and UK exposures. These sectors were also largely the source of negative alpha generation in October. European managers underperformed their regional peers in the US and Asia Pacific. European equities were net sold in November, primarily driven by macro hedging activities. Overall, Europe-focused fundamental long / short managers’ gross leverage increased and net leverage decreased. European managers’ gross increased by 0.7% to 186%, while nets decreased by 0.4% to 66.8%.

Asian Equity Hedged strategies generated mixed returns in November. Funds with more directional exposure to US AI and Asia AI incurred modest losses, while funds with more diversified holdings fared better. The Japanese markets were mixed, with the more AI exposed Nikkei down on the month, while the TOPIX was positive. The Chinese market also experienced some volatility despite there being no major negative news around the US / China relationship. Investors took profit on some of the crowded year-to-date winners and sentiment was also weaker on the back of the relatively soft macroeconomic data, while the Q3 earnings and Q4 guidance pointed to a decline in domestic consumption.

HFRI Relative Value Total Index:

Fixed income relative value strategies generally produced positive performance in November. Most strategies were additive to performance during the month. Macro RV themes such as European long end steepeners and tenor basis contributed positively, while cash / futures basis and bond RV strategies also produced gains. Swap spread trading was also generally additive. Cash levels remained relatively high for most managers as portfolios continued to focus more on derivative trading, while balance sheet intensive strategies were generally running lower risk.

Capital structure / volatility arbitrage strategies generated modestly negative performance in November. Convertible arbitrage gave back some of its prior month’s gains, driven by risk-off movements in digital assets and AI. Basis weakening was fueled by this risk-off sentiment combined with weaker new issuance performance, particularly among AI-related issuers, while digital assets-related names experienced only limited impact on perceived credit quality. By the last week of the month, sentiment improved, supported by a rebound in digital assets and growing confidence in an anticipated December Fed rate cut. Despite heightened equity volatility, November’s convertible issuance remained solid at USD 15.8bn, although well below September’s record levels and increasingly skewed toward smaller, lower-quality AI issuers. Year-to-date, USD 153bn of paper has been absorbed by the convertible market, setting 2025 on track to a new record for issuance.

Merger arbitrage and event-driven strategies generated positive performance in November. Average annualized spreads to SOFR for 0-30% deals widened, ending at 5.7% (from 5.4% at previous month-end). The average non-annualized spread to deal price ended around 3.3% this month, compared with 3.6% at previous month-end. The deal environment, both from a regulatory as well as market perspective, continues to be highly conducive to additional deals being announced. The total US spread opportunity finished the month near USD 18bn, which was 26% higher compared to the prior month-end. Agency MBS strategies generated relatively flat returns in November. There was a reasonable amount of dispersion at the manager level as some funds were slightly positive, while others suffered modest losses. At the portfolio level, carry was positive but was partially offset by spread widening. In particular, spreads on Inverse IOs moved wider in response to the elevated prepayment speeds in October.

Quantitative equity strategies generally produced positive performance in November. Overall manager results demonstrated meaningful dispersion, with positive average returns, driven by positive alpha and, to a much lesser extent, beta gains. There have been headwinds from the factor space as both quality and low beta detracted. Technical models outpaced fundamental ones, with mid-frequency outperforming low-frequency models. From a factor perspective, asset selection, crowdedness (short and long), short concentration, size and healthcare were among the largest alpha contributors to systematic long / short returns in November. These were partially offset by the weakness across liquidity, information technology, and short-term momentum factors.

HFRI Reltive Value Total Index:

Corporate credit strategies generated positive performance in November. Corporate long / short sub-strategy generated a profit with the vast majority of managers accretive and continuing to benefit from increased dispersion. The largest source of gains came from European high yield and US investment grade corporate credit. Corporate long-biased themes produced mixed results. Manager performance varied as most funds finished the month in a -1% to +1% band. Interest income generated gains, although a portion of these gains were offset by spread widening. Dispersion within the CCC segment of the market was higher during the month, and this dynamic was reflected in manager returns.

Asset back strategies (ABS) produced positive performance in November. Profits were driven by interest income, with gains coming from both short duration carry investments and tradable asset backed securities. At the asset class level, gains were primarily attributable to residential real estate credit, SRT, and specialty finance deals. CLO equity underperformed compared to other asset classes as tranches were marked lower in response to increased selling activity in the market.

Reinsurance / ILS strategies generated positive performance in November. Performance was mainly a function of carry / coupon income for the cat bond manager and premium accrual for the collateralized reinsurance manager. Spreads ended the month slightly wider, which was a marginal headwind for the cat bond manager. There were no material loss-producing events in November.

HFRI ED: Credit Arbitrage Index: