Shake It Off
Shaking off a mid-month wobble on China tariff threats and worries surrounding regional bank exposure to sub-prime auto loans, stock markets worldwide staged another broad rally in October with the S&P 500 (+2.3% Oct) and Nasdaq 100 (+4.8% Oct) each hitting record highs while the MSCI Emerging Markets continued its unbeaten streak in 2025, rising for a tenth straight month with a gain of 4.2%.
With tactical hedges dampening the mid-month turbulence and then removed for the ensuing rally, TCM Risk Managed Equity strategies were able to capture nearly all of the month’s index gains with lower volatility, widening Tactical Beta’s lead against major hedged equity peers in 2025 as well as in each of the one, three and five year rolling periods and since inception (chart).
Tactical Beta return comparison as of Oct 2025. Source: TCM, Barchart.com. Click for larger image
Between tentative peace in the Middle East, a rumored China trade deal and the Fed cutting rates for the second time in 2025, there was no lack of bullish catalysts for stocks in October and although rare, rate cuts with stocks at record highs are not unprecedented. Perhaps analogous to today’s “AI” mania, the last rate cut at all-time highs in 1998 helped to turbocharge the S&P 500 over the next two years as the “Dot Com” bubble inflated (chart).
Pardon The Disruption
While most TCM strategies are designed to offer “core” equity index exposure, Hedged Disruptor is a collection of individual stocks intended for more aggressive areas of a portfolio. Focused on emerging industries with the greatest potential for growth, this portfolio naturally gravitates to areas such as technology, energy, and med-tech. Recognizing that even the strongest themes can be derailed by a systemic crisis, the portfolio also employs TCM’s signature tactical risk management using signals from its proprietary Volatility Dashboard.
Since the launch of ChatGPT in 2022, growth trends have strongly favored companies involved with the “picks and shovels” of the AI ecosystem and with the modernization of power production and delivery. Within the theme of modernization, the portfolio has also found opportunity among the facilitators of modern market structure and providers of breakthrough solutions for the obesity epidemic in the US.
With its focused positions, Hedged Disruptor was designed to target aggressive performance when the prevailing trend is favorable and is expected to exhibit high volatility. This has certainly been the case in 2025, with this spring’s "Tariff Tantrum” decline partially cushioned by VIX hedging gains before ultimately giving way to a strong recovery in growth themes that has so far resulted in a net return of 49% on the year for the strategy (chart).
Hedged Disruptor composite YTD 2025 net return comparison. Source: TCM, Barchart.com. Click for larger image. See Fact Sheet for 1,3, and 5 year returns.
The most aggressive TCM strategy, Hedged Disruptor is a unique option for those looking to add thoughtful high-beta exposure to a portfolio. Contact Us today to learn more!