March 2026

“War is the realm of uncertainty…” Clausewitz

As expected, the military action that began at the end of last month escalated into a full-blown conflict in March and unsurprisingly dominated both news flow and markets. Volatility surged along with oil prices and interest rates, driven by oil supply concern and heightened inflationary expectations. Price moves were accentuated by the unwinding of bullish positions in rates, and also the general uncertainty created by both the unconventional information dissemination and lack of strategic framing from official sources (POTUS) and the knee-jerk reaction elicited in response to said communication in conventional media circles. From a market perspective, the net result of this is to significantly complicate the Fog of War and its ultimate impact.

With concerns over private credit exposure already growing, tightened credit conditions resulting from the conflict will lead to economic slowdown, which in turn means that it is unlikely that we are facing structural higher rates for a prolonged period of time. To be certain, there will be considerable uncertainty in macro data in the months ahead and given central bank sensitivities from having misread the inflationary cycle, following the monetary binge of the COVID era, we could see a similar mistake in the opposite direction this time. In that event one must look at areas of concern antebellum to look for where the impact is likely to be greatest, which brings us back to private credit. Concern over the breadth of private credit exposure will mount until there is a greater sense of both magnitude and potential impairments, which suggests near term caution is warranted.

Given price action in markets it was a challenging month for the portfolio with the fund’s A share losing -2.6%. Fixed income detracted 2.7%, while equities provided a modest offset, contributing a 0.1% gain. Given ongoing circumstances we will be deliberate in altering the portfolio until circumstances are clearer but remain confident that tremendous opportunities will present themselves in the coming months.