Q2 Portfolio Update – Stable Performance in a Volatile Environment

Q2 Recap of our L/S Commodity Strategy

Our long/short commodity strategy has had a strong start to the year despite significant geopolitical turbulence. Second-quarter performance was broadly flat, with a modest gain of 0.2%. Meanwhile, the Sharpe ratio improved slightly to 2.4. Year-to-date, the strategy is up 7.1%.

While the broader commodity markets experienced significant volatility (up and down), our strategy remained largely stable throughout the quarter. Annualized volatility continues to remain well below 10%.

By comparison, the Bloomberg Commodity Index fell by nearly 12% in the second quarter, while experiencing significantly higher volatility.

During Q2, we implemented and closed a total of 14 trades (10 long and 4 short). The biggest contributors to performance were:

• Short: Cotton

• Long: Sugar, Feeder Cattle

Current positioning

The strategy is currently positioned to benefit from the expected effects of a strong El Niño, which we believe will create opportunities on both the long and short sides of the commodity markets. We currently have six active positions in the portfolio.

That said, we were somewhat early in establishing several trades designed to benefit from El Niño. For example, our largest individual loss came from a long position in sugar, which reached our maximum portfolio risk limit of 75 basis points.

Q3 outlook

Our conviction remains unchanged. We believe we were simply early rather than wrong. The underlying fundamental backdrop remains intact, and we believe market participants are now increasingly adopting the same view.

Market attention has largely shifted away from the US-Iran conflict toward the potential consequences of a strong El Niño during 2026 and 2027.

All the best,

Lukas

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Institutional Services

If you’re an institutional investor that wants to commit money into our strategy, receive a portfolio-overlay or copy our strategy to participate directly from our framework - contact us via info@lukas-kuemmerle.com

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Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via X or Mail.

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