Market conditions remained highly dynamic during the reporting period, with geopolitical developments, oil price volatility, and shifting investor sentiment contributing to significant market swings.
Recent trading sessions included unusually large reversals across both oil and equity markets. Oil moved approximately 16 to 17 points lower following weekend developments, while major equity indexes experienced substantial swings over several consecutive sessions. From our perspective, recent market activity has reflected rapid changes in investor interpretation of new information rather than gradual shifts in underlying market trends.
In response, portfolio management remained focused on applying established risk management processes. As market conditions evolved, positions were adjusted, rolled, or closed in accordance with strategy guidelines rather than short-term market sentiment. While these conditions contributed to larger-than-normal month-end fluctuations, our approach continues to emphasize disciplined portfolio management and ongoing evaluation of market conditions.
MTD: +0.5%
YTD: +3.7% (before applicable management fees and incentive fees)
The prior month was approximately -7.8% before the impact of incentive fee givebacks. For investors with previously accrued incentive fees, the accounting treatment may reduce the reported decline. These figures are preliminary, and updated month-end reporting will be provided when available.
Recent positioning reflects adjustments made during a period of elevated market volatility.
MTD: +0.5%
YTD: +16.3% (before applicable management fees and incentive fees)
The prior month was approximately -7.8% before applicable incentive fee accounting adjustments. Current results remain preliminary pending final month-end reporting.
MTD: +1.25%
YTD: +10.9% (before applicable management fees and incentive fees)
The Synthetic Fund returned approximately -8.0% during the prior month. Current positioning continues to be managed in response to changing market conditions and ongoing developments affecting oil and volatility markets.
MTD: +2.7%
YTD: +22.6% (before applicable management fees and incentive fees)
The Volatility Advantage Fund returned approximately -11.6% during the prior month. Approximately 25% of that drawdown was recovered on the first trading day of the current month. These figures are preliminary and subject to final reporting.
Prior Month: +0.75% (after fees)
YTD: +3.5% (after fees)
The Insiders Fund generated approximately 0.75% net performance for the month and is up approximately 3.5% year-to-date after fees.
Current market conditions remain mixed. Interest rates have continued to move higher, while equity markets have remained resilient despite ongoing geopolitical developments. From Harvey's perspective, economic activity remains supported in part by elevated capital spending among several large technology companies, particularly investments related to AI infrastructure and data centers. While concerns about AI-related job displacement continue to receive attention, there has been limited evidence of widespread employment impacts to date.
One of the primary risks for the firm's options-based strategies is a rapid sequence of market reversals rather than a sustained move in a single direction. During the recent reporting period, the oil market experienced multiple consecutive moves of unusual magnitude, including sharp advances and declines over only a few trading sessions. These rapid changes required multiple rounds of repositioning.
Risk management procedures differ depending on the underlying instrument. Volatility positions are managed with predefined exit parameters because volatility can accelerate rapidly during periods of market stress. For more range-bound instruments, the typical approach is to roll, split, and adjust positions as market conditions change. During the recent oil market moves, the magnitude and frequency of price reversals exceeded the range these positions are generally designed to accommodate, requiring full repositioning rather than the normal rolling process.
Following these adjustments, new volatility positions were established, most covered call exposure was removed, and work began to re-establish oil strangles using shorter durations and strikes farther out of the money. Additional analysis of the recent market sequence remains ongoing as part of the firm's continuing review of strategy performance and risk management.
The views expressed herein reflect current market commentary and portfolio observations as of the date published and are subject to change without notice. Statements made by portfolio managers represent current opinions based on prevailing market conditions and should not be interpreted as guarantees, forecasts, or assurances of future performance or market direction.
Any performance information shown is preliminary, unaudited, and may reflect results before applicable fees, expenses, or final administrator reporting where noted. Actual investor results may differ based on fee structure, timing of contributions or withdrawals, and other account-specific factors.
This material is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security, fund, or investment strategy. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal.
