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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Absolute Return Partners 2025 Q2 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q2 2025 Letter Analysis

Absolute Return Partners Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Absolute Return Partners. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Digest Analysis

Quick Take

"Megatrend investor deliberately avoiding Magnificent 7 concentration risk, maintaining zero allocation to expensive US tech stocks. Focus on European and Asian markets delivering lower volatility and strong downside protection."

Executive Summary

Absolute Return Partners manages a megatrend investing strategy launched in May 2022, deliberately avoiding the Magnificent 7 stocks that now represent 32% of S&P 500 market cap. The manager argues that extreme market concentration historically leads to lower long-term returns, citing Goldman Sachs research. With technology stocks trading at all-time high multiples, they maintain zero allocation to Magnificent 7 and underweight US equities generally. Instead, they focus on European and Asian markets which account for half their investments and have recently outperformed US equities. The strategy targets double-digit annual returns over complete economic cycles through disciplined value investing and risk management. They maintain equity beta well below one and have delivered significantly lower volatility than major indices. On the 20 worst market days over 18 months, they outperformed MSCI World on 17 occasions. While this approach causes underperformance during US tech rallies, the manager believes it positions the portfolio for superior long-term risk-adjusted returns.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

80%

CautiousHigh

High Conviction (80%)

Manager demonstrates high conviction in avoiding Magnificent 7 with zero allocation, clear articulation of concentration risks, and unwavering commitment to megatrend strategy despite recent underperformance. Strong conviction in risk management approach.

Growth Outlook

38%

BearishBullish

Neutral (38%)

Manager expresses concern about extreme market concentration and elevated technology valuations, warning that correction will take place at some point. However, they note recent outperformance of European and Asian markets provides some optimism.

Risk Appetite

30%

DefensiveAggressive

Defensive (30%)

Portfolio is positioned defensively with low equity beta, zero allocation to Magnificent 7, and underweight to US technology. Manager emphasizes risk management and diversification over aggressive growth positioning.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No specific information provided about recent changes in cash levels or capital deployment activity. Manager indicates maintaining current positioning rather than active deployment or de-risking.

Forward Guidance

45%

CautiousExpansionary

Neutral (45%)

Manager states they will continue avoiding US technology stocks unless they become much cheaper, indicating cautious stance. However, they express confidence in strategy working better going forward as European and Asian markets outperform.

Language Signal

40%

BearishBullish

Balanced (40%)

Language includes risk-focused terms like correction, expensive, elevated multiples, and systematic concerns about concentration. Balanced by confidence in strategy and positive view on non-US markets.

Perceived Risk

70%

Low RiskElevated

Elevated Risk (70%)

Manager identifies significant systemic risks from market concentration, elevated technology valuations, and inevitable correction timing uncertainty. Emphasis on risk management and downside protection indicates high perceived risk environment.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

Manager sees selective opportunities in European and Asian markets while avoiding expensive US technology. Megatrend focus suggests identified opportunities in specific themes, though overall tone suggests limited attractive opportunities in current environment.

Time Horizon

85%

Short-TermLong-Term

Decade+ (85%)

Strategy explicitly targets returns over complete economic cycles and full cycles, indicating long-term patient capital approach. Manager willing to accept near-term underperformance for long-term positioning, demonstrating high time horizon patience.