Fairtree Wild Fig Multi Strategy Hedge Fund Q2 2026 Investor Update

The Fairtree Wild Fig Multi 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.

The Fairtree Wild Fig Multi Strategy FR Retail Hedge Fund (“the Fund”) delivered a loss of -4.4% for the second quarter. While quarterly outcomes will inevitably vary, the Fund remains true to its investment objective of compounding clients’ capital over the long term through disciplined execution across a diversified set of investment strategies.

The challenging macro backdrop (elaborated on further below) weighed on performance during the quarter, with equities the primary detractor and commodities also detracting from performance. Offsetting this, the Fund’s fixed income positioning provided some resilience, reflecting its uncorrelated nature. The Fund’s decline compares to a -2.3% return for the JSE All Share Index over the same period. The Fund remains highly diversified, enabling it to pursue uncorrelated sources of alpha across a broad opportunity set.

Where the first quarter was defined by escalating conflict and pronounced risk-off sentiment, the second quarter delivered one of the sharpest reversals in recent market history. Following a turbulent first quarter marked by elevated volatility and corrective price action stemming from the US-Iran conflict, global risk assets rebounded strongly. The primary catalysts were continued AI-driven capital expenditure, easing geopolitical tensions, and improving investor sentiment. The geopolitical backdrop improved materially after the US and Iran signed a memorandum of understanding to end hostilities, following a framework that included a 60-day ceasefire and the reopening of the Strait of Hormuz.

The agreement paved the way for renewed negotiations on Iran’s nuclear programme. Oil shipments through the strait normalised, crude prices retraced towards pre-conflict levels, and much of the inflation scare that had gripped markets in March unwound. Monetary policy also underwent a meaningful shift. The Senate narrowly confirmed Kevin Warsh as Federal Reserve Chair on 13 May (54-45). At his first meeting, the Fed left rates unchanged, but almost half of the FOMC indicated support for a rate hike later this year, a notable shift from March, when no committee members projected further tightening. Markets initially wobbled before the broader rally resumed, driven by sustained AI-related investment and an expansion in market leadership beyond the mega-cap technology names.

US equities staged a remarkable recovery during the quarter (in US dollar terms). The S&P 500 and Nasdaq 100 gained 14.9% and 21.4%, respectively, recording their strongest quarterly performances since Q2 2020, while the Dow Jones Industrial Average rose 12.9%, its best quarter since Q4 2022. Market breadth broadened significantly by quarter-end, with small-cap, micro-cap, equal-weight and value indices all reaching new record highs. The Philadelphia Semiconductor Index delivered an 87.8% return, its strongest quarterly performance since the index was launched in 1994, as AI infrastructure spending remained the dominant investment theme. One of the quarter’s defining events was SpaceX’s record-breaking IPO in June, which briefly pushed the company towards a US$3 trillion valuation.

The listing sparked vigorous debate among both institutional and retail investors regarding the scale of new market entrants and whether companies of this nature should be included in major equity indices from the outset. Corporate earnings continued to surprise positively. Consensus S&P 500 Q2 earnings growth expectations increased from 18.8% at the start of the quarter to 23.1% by quarter-end, led by upward revisions in the technology and energy sectors. Outside of equities, the picture was more nuanced. The US 10-year Treasury yield rose steadily as markets repriced the Federal Reserve outlook from expectations of two rate cuts at the start of the year to pricing in two hikes by year-end (representing an approximately 100 basis point swing in expectations). Precious metals, which had been among the strongest-performing assets in 2025, experienced a sharp reversal. Gold recorded its largest monthly decline since 1975, while silver fell by more than 50% from its recent highs.

China’s economy continued to stabilise, although policymakers remained cautious. First-quarter GDP growth came in at 5.0%, while producer prices turned positive on a year-on-year basis for the first time in 41 months. Against this backdrop, the People’s Bank of China shifted from an explicit easing bias towards a more data-dependent stance, removing references to further interest rate and reserve requirement ratio cuts while emphasising close monitoring of global monetary policy, particularly the Federal Reserve’s increasingly hawkish stance. Economic activity also showed signs of improvement, with the Services PMI rising to 54.4 in May, its strongest reading in three months.

South African markets broadly participated in the global de-escalation trade. As Brent crude retreated from its Q1 highs, the rand strengthened, supported by both domestic policy developments and broad US dollar weakness. The South African Reserve Bank raised the repo rate by 25 basis points in May as higher fuel and producer prices filtered through to inflation. South Africa enters the second half of 2026 facing softer economic growth, higher inflation and a more hawkish central bank. Many market participants expect a further 25-basis-point hike in July, potentially marking the end of the current tightening cycle. The domestic labour market remained a notable weakness, with the unemployment rate rising to 32.7% in Q1 2026 from 31.4% in the previous quarter. The JSE All Share Index declined by -2.2% over the quarter, weighed down by a -19.8% fall in the Resources Index. Looking ahead, the easing of geopolitical tensions, a likely conclusion to the domestic hiking cycle, and the prospect of further sovereign credit-rating upgrades could provide a more supportive backdrop for South African financial markets during the second half of the year.

At the asset class level, the Fund’s quarterly performance was weighed down by its equity positioning, with commodities also detracting. Fixed income strategies were the only positive contributor to performance.

Equity strategies were the main detractor from the Fund’s performance during the quarter, returning -4.9%, as all underlying equity strategies struggled. Both the local and global market-neutral strategies detracted, though the SA directional strategy was the most significant source of losses. At a sector level, materials and consumer discretionary were the main detractors. Within materials, exposure to precious metals (both gold and PGMs), diversified miners and energy stocks weighed heavily on performance, a marked reversal from the previous quarter, when materials were a significant contributor to the Fund’s performance. The consumer discretionary sector remained a persistent detractor, consistent with the prior quarter. These losses were partially offset by the consumer staples and communication services sectors, with consumer staples remaining the top-contributing sector on a year-to-date basis.

The combined fixed income strategies were the sole positive contributor to the Fund’s performance, adding +1.2% for the quarter. This was driven mainly by the Fixed Income Quantitative strategy, returning +1.5%, while the Fixed Income Fundamental strategy -0.3% was a marginal detractor over the period, having given back the performance gains from early in the quarter. Similar to the first quarter, fixed income was the standout contributor to the Fund’s performance. The geopolitical supply shock led to significant repricing across interest rate markets, creating attractive opportunities along the yield curve, and reinforcing the benefit of blending low-correlated strategies.

The quarter proved challenging for the Fundamental strategy as the Fund’s longer-dated bond exposure detracted from performance later in the quarter after being a contributor earlier on. The negative contribution from SA bonds was partially offset by the Fund’s interest rate derivatives positions. On a year-to-date basis, this strategy continues to be a significant contributor to the Fund’s performance, with most of the positive attribution coming from the ability to take advantage of the significant movements across the SA bond curve. In comparison, the Quantitative strategy was able to extract positive returns from the bond curve, while the interest rate derivatives positioning marginally detracted from performance. The strategy continues to contribute positively for the calendar year.

The commodities strategy faced another difficult quarter, returning -0.7%, as spreads continued to widen across underlying commodity pairs. Entering the year, we held several positions where spreads had widened due to a combination of macroeconomic uncertainty and commodity-specific events, including geopolitical developments and disease-related disruptions. These dislocations persisted for longer than expected, resulting in wider spreads and detracting from performance over the period. In response, we have actively managed the portfolio by reducing position sizes where appropriate as opportunities evolved, while introducing new arbitrage opportunities across a broader range of commodities. This has improved diversification within the strategy and reduced reliance on any single spread normalising.

_{Source:Fairtree, Bloomberg. As at 30 June 2026. Fairtree Wild Fig Multi Strategy FR Retail Hedge Fund.}