April was a month marked by volatility across global markets. Persistent inflationary concerns, shifting interest rate expectations, and geopolitical uncertainty led to sharp reversals and heightened anxiety in equity markets. Despite these challenges, we are pleased to report that our portfolio weathered the storm well, and in several areas, even capitalized on it.
While major indices experienced significant whipsawing, starting with an -18.9% peak to trough draw down in the S&P 500 and then a sharp reversal as tariff optimism spread. Hyperion was positioned to benefit +1.96% for the month, thanks in part to our long volatility exposure, a cornerstone of our risk management approach.
Benefiting from Long Volatility
One of the key contributors to our performance this month was our exposure to volatility itself. Rather than viewing volatility as merely a risk to be hedged, we view it as an asset class, one that can generate meaningful returns in moments of market dislocation.
Our long volatility positions, implemented via a combination of long VIX spreads, short-dated long index puts, and structurally convex strategies, served multiple purposes:
- Portfolio Composition: As equity markets sold off, our volatility positions appreciated sharply, offsetting losses elsewhere and stabilizing the portfolio.
- Asymmetric Payoff: Because we aim enter these positions at attractive prices during calmer periods, they provided significant upside for the capital at risk, delivering convex returns when most other assets faltered.
Market Neutral finds Success
Our disciplined approach to risk management and our opportunistic positioning allowed us to sidestep much of the downside and selectively lean into price discrepancies created by market dislocation. As markets repriced risk, our ability to monetize gains from these positions allowed us to selectively add exposure to high probability short duration trades that become temporarily dislocated. This dynamic, defense first, offense when conditions allow, is central to how we aim to deliver consistent risk-adjusted returns across these violent cycles.
Several of our core themes proved resilient in April but paramount to all else is our static approach from one month to the next which removes behavioral bias and the temptation to forecast the future.
We do not attempt to time the turbulence, rather we relied on staying grounded in process, applying robust risk controls, and remaining flexible when opportunity presented itself. These principles helped us navigate the month effectively, and they continue to serve as the backbone of our long-term strategy.
Looking forward, we remain alert to both the risks and the opportunities that this environment offers. While volatility can be unsettling, it also creates opportunities by giving rise to pricing inefficiencies, and ultimately potential returns.
▶️ Watch our Q1 performance recap webinar here
Disclaimer – The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains. In some cases, managed commodity accounts are subject to substantial charges for management and advisory fees. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets.
