The widely held assumption that the Trump administration would introduce volatility to U.S. financial markets was validated in February. The month began with a surge to fresh all-time highs across broad indices before a sharp reversal, most notably in the Nasdaq 100, which finished the month down 2.7%, nearly 9% off its highs from just two weeks prior. This decline was driven by several factors, largely stemming from trade tensions following the implementation of tariffs on goods from various countries. Additionally, U.S. consumer confidence experienced its steepest decline since August 2021.
We are pleased to report that Hyperion Fund achieved a +0.96% return in February 2025. Our disciplined investment approach and robust risk management strategies have once again demonstrated resilience amid market volatility. We remain steadfast in our core philosophy: generating returns in various market environments through a disciplined portfolio balance of 35% long volatility and 65% market-neutral strategies. This allocation has been our guiding principle for years, ensuring that our decision-making remains free from emotional bias and unnecessary speculation. Rather than attempting to forecast the market, we focus on maintaining a structure that maximizes the probability of success across all conditions. Even at the expense of upside in rapidly rising markets, we stay committed to what has consistently steered us in the right direction through both extreme and stable market environments.
This balance meant that during the first two weeks of February when the market surged we remained relatively flat. In such a melt-up scenario, where indices rally 3–5% in a short period, we tend to underperform our typical daily return, as our market-neutral strategies reach their profit potential while the long volatility components lose value. However, as the market reversed in the second half of the month, we captured significantly larger gains. Our market-neutral positions either held onto profits or strategically reduced risk, while the long volatility component capitalized on the downside momentum. Occasionally, market conditions align perfectly with our approach, February was one of those months.
Fund Performance & Positioning
Our ability to generate positive returns in a declining market underscores the strength of our strategy. Key contributors to our performance included:
- Defensive Positioning: This component of the portfolio remains constant, ensuring readiness for unforeseen pullback events without attempting to time the market.
- Opportunistic Market-Neutral Positions: Selective positioning in optimal risk/reward scenarios. When volatility spikes, this part of the portfolio naturally becomes more selective but continues to seek and take calculated risks.
- Dynamic Risk Management: Active adjustments to open positions are a continuous process. Whether reducing exposure in an at-risk trade or realizing profits and redeploying capital, risk management remains a priority.
We expect these market conditions to persist and we remain confident in our approach. Our objective is to provide investors with peace of mind and stability in their portfolios.
These are the moments where we not only discuss our strategy but also demonstrate its effectiveness in real time. View our S&P 500 comparison graphic below.
We remain committed to delivering strong risk-adjusted returns, regardless of market conditions. We appreciate your continued trust and support. Please feel free to reach out with any questions.
Why Consider Hyperion Fund in Today’s Market?
In an unpredictable market environment, investors are increasingly seeking uncorrelated returns that are independent of S&P 500 performance. The Hyperion Fund offers a compelling opportunity for savvy investors to diversify their portfolios and achieve an absolute return, even when traditional markets fluctuate. Discover the value of allocating to the Hyperion Fund and how it can enhance your investment strategy in today’s dynamic landscape:
Download the above graphic to enlarge 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.
