Fairtree Wild Fig Multi Strategy Hedge Fund Q1 2026 Investor Update

Introduction

The Fairtree Wild Fig Strategy (“Wild Fig”) is our flagship multi-strategy balanced hedge fund range, designed to deliver equity-like returns with meaningfully lower drawdowns by combining uncorrelated alpha streams across equities, fixed income and commodities.

*Note: Reported fund performance throughout refers to the Fairtree Wild Fig Multi Strategy FR RI Hedge Fund (RIHF) (unless otherwise stated). All returns are net of all fees. As the funds are managed in a similar manner, despite the regulatory differences between the two ZAR funds (QIHF and RIHF), over the fullness of time, we expect that the two funds will produce similar net returns. US dollar investors can access the strategy via the Cayman-domiciled Fairtree Wild Fig Multi-Strategy USD Fund.

Performance

The Wild Fig Multi Strategy FR RI Hedge Fund (“the Fund”) delivered a marginal gain of +1.2% for the first quarter. The strategy remains true to its investment objective of compounding clients’ capital over the long term.

The challenging macro backdrop (elaborated on further below) weighed on performance during the quarter, with equities and commodities detracting slightly. Offsetting this, the Fund’s fixed income positioning provided meaningful resilience, reflecting its uncorrelated nature. Wild Fig’s capital preservation was particularly evident in March, where the Fund detracted c.4% against a c.10.5% decline in the JSE All Share. The Fund remains highly diversified, allowing the strategy to pursue uncorrelated sources of alpha across a broad opportunity set.

Graph 1: Rolling 12-month quarterly asset class attribution

Source: Fairtree, Bloomberg. As of 31 March 2026. Fairtree Wild Fig Multi Strategy FR RIHF.

Macro backdrop

Momentum across global markets did not carry through into the first quarter of 2026, with risk assets experiencing a more challenging and volatile start to the year. Headlines were dominated by the escalation of geopolitical tensions in the Middle East, rising concern around the extent of the disruption to the Strait of Hormuz, and sharp moves in global oil prices – all of which contributed to a level of uncertainty that markets struggled to price consistently. While the disinflationary trend that characterised much of 2025 appeared to carry into the start of the year, the re-emergence of conflict-driven risks introduced renewed questions around global growth, inflation, and policy direction.

The result was a quarter defined less by directional conviction and more by sharp rotations, with risk-off sentiment dominating much of March. As things stand, the path forward remains highly uncertain. Late-quarter commentary from US President Donald Trump, suggesting a US withdrawal from the region “within two to three weeks”, offered a brief rally into quarter-end trading. Despite this, the trajectory and duration of the conflict remain unknown, and until a clearer resolution emerges, markets are unlikely to find a stable anchor. As the adage goes: when the US sneezes, everyone catches a cold. Major indices pulled back in Q1 2026 (in US dollar terms): S&P 500 (-4.3%), Nasdaq 100 (-5.8%), MSCI World (-3.5%), Nikkei (+0.5%), and Euro Stoxx (-5.1%).

US equities ended Q1 2026 in negative territory, marking a notable reversal from the strong gains of 2025. Microsoft (a proxy for large-cap tech) logged its worst quarterly performance since the 2008 financial crisis, with shares declining 23% over the period, reflecting a broader rotation away from the mega-cap technology names that had led markets higher. The Magnificent Seven (which had anchored sentiment and returns for the better part of two years) came under renewed pressure as stretched valuations met a more hostile macro backdrop. On the monetary policy front, the Federal Reserve held rates steady at both its January and March meetings, keeping the federal funds rate unchanged at 3.50% – 3.75%.

The committee made a few changes to its economic view, projecting slightly faster growth but higher inflation for 2026, and the updated dot plot continued to signal one reduction this year and another in 2027, though timing remains unclear. CPI rose 2.4% over the 12 months to February, with core inflation also holding at 2.5% – above the Fed’s 2% target but reflecting a moderation from 2025’s peak. The FOMC’s statement explicitly noted that the economic implications of developments in the Middle East remain uncertain, and Chair Powell struck a cautious tone regarding future rate cuts. Markets entered the quarter pricing in two cuts for the year; by quarter-end, expectations had been pared back to at most one. The Fed has effectively entered a wait-and-see stance, caught between a potentially softening labour market and an oil-driven inflation risk that its traditional toolkit is ill-equipped to resolve.

China’s macro picture in Q1 2026 presented a familiar duality: resilient headline numbers that masked ongoing structural fragility. After GDP growth reached 5% in 2025, it is likely to moderate to around 4.5% in 2026 as the contribution from net exports diminishes, and on 5 March, China set its 2026 growth target to a range of 4.5%–5%, its lowest target since 1991. The People’s Bank of China maintained a cautious stance, reiterating that any further monetary easing would be selective and targeted, and noting that potential inflationary effects from Middle East oil price rises would be felt less acutely in China given the government’s ability to limit pass-through to consumer prices.

South African markets faced a more testing quarter after the exceptional gains of 2025. The JSE All Share Index, having closed last year up approximately 42%, encountered meaningful headwinds (Q1 2026 (ZAR): -0.61%) as rising Brent crude prices (near US$110 per barrel) and global risk off sentiment pushed the rand above R17.00 to the dollar, introducing imported inflation pressures and placing the South African Reserve Bank (SARB) in a difficult position. Against this backdrop, the SARB held its repo rate steady at 6.75% at both its January and March meetings, pausing the easing cycle that had gained traction in late 2025.

The SARB now projects only one rate cut this year, down from two previously, and is actively stress-testing scenarios based on both a short and prolonged conflict. The precious metals complex (gold, platinum, and palladium), which drove so much of the JSE’s outperformance in 2025, remains a key variable: should gold’s safe-haven demand persist, and platinum group metal supply constraints continue, resource counters could resume their leadership role. The JSE came under significant pressure in March (-10.45%), recording its worst monthly performance in years, despite a strong rebound in the final week of the quarter as diplomatic signals around the US-Iran conflict offered some relief. 

Quarterly Performance

Graph 2: Q1 2026 asset class attribution

Source: Fairtree, Bloomberg. As at 31 March 2026. Fairtree Wild Fig Multi Strategy FR RIHF.

On an asset class level, the Fund’s quarterly performance was supported by positioning in fixed income, while equities and commodities both detracted marginally from performance.

Equity strategies were a slight detractor from Fund performance during the quarter (-0.2%). The market-neutral strategies proved resilient through the volatility of March and offset some of the losses experienced from the directional strategy, which delivered strong returns earlier in the quarter. At a sector level, positive attribution came from positioning in materials (including energy), consumer staples (notably food retailers and food producers) and financials, specifically banks and holding companies. This was more than offset by the Fund’s exposure to the consumer discretionary sector, which was the most significant detractor during the quarter. Both local and offshore consumer discretionary companies struggled throughout the period, with local apparel retailers having faced persistent headwinds over the past twelve months.

The combined fixed income strategies were the standout contributor to Fund performance, adding (+1.6%) for the quarter and demonstrating the benefit of blending low-correlated strategies, as their positive returns helped absorb losses from other parts of the portfolio. The Fixed Income Fundamental strategy continued its strong run from last year, contributing (+0.3%) for the quarter. The Fixed Income Quantitative strategy delivered a particularly strong start to the year (+1.3%), a welcome rebound following a more challenging prior period. SA bonds opened the year positively, with meaningful gains through to the end of February as the yield curve continued to flatten. March brought a sharp reversal, with yields selling off by more than 100 basis points across the curve; however, disciplined positioning and timely profit-taking meant the strategies were not materially impacted by the move. Curvature trades in the belly and back of the yield curve remained a significant contributor to performance, and a USD/ZAR hedge provided additional protection through the risk-off environment that characterised March.

The commodities strategy continued to encounter headwinds during the quarter (-0.2%), navigating a persistently difficult operating environment. Performance was once again shaped by supply-side pressures across key market segments, stemming from trade restrictions, regulatory frictions and cross-border logistical disruptions. These dynamics tightened market balances and contributed to sharp price dislocations. Although substitution effects and end-market supply adjustments provided some relief, they were not sufficient to fully counteract the impact, resulting in price pressures that weighed on returns. The strategy remains a meaningful diversifier within the portfolio and continues to be positioned to benefit from supply-driven dislocations should geopolitical or weather-related shocks materialise.

Graph 3: Q1 2026 strategy attribution

Source: Fairtree, Bloomberg. As at 31 March 2026. Fairtree Wild Fig Multi Strategy FR RIHF.