David Elms on How Market Mayhem Is Again Making the Case for Multi-Strategy

Why It Matters

Multi‑strategy funds offer a defensive yet opportunistic layer that can stabilize returns amid market volatility, making them essential for investors seeking diversification and exposure to emerging credit and commodity themes.

Key Takeaways

• Multi‑strategy funds gain appeal amid equity sell‑off, bond rise
• Janus Henderson fund shows low correlation to global equities, assets
• Convertible arbitrage focuses on hedged credit risk and AI capital demand
• Equity repo improves via balance‑sheet supply and US bank deregulation
• Commodity‑equity plus trend‑following aims to amplify gains, protect downturns

Summary

David Elms of Janus Henderson explained why the current market turbulence—driven by geopolitical tension, equity sell‑offs and rising bond yields—creates a fertile environment for multi‑strategy funds that can offer neutral, low‑correlation exposure. He highlighted the Global Multi‑Strategy Fund’s design, emphasizing its historically low correlation to equities and other asset classes, which becomes especially valuable when markets turn lower.

The conversation covered several niche strategies. In convertible arbitrage, the team hedges macro credit risk while targeting AI‑related capital raises. Equity repo has steadied thanks to new balance‑sheet providers and anticipated U.S. bank deregulation, improving funding conditions. Dispersion bets have shifted toward higher stock correlation, and market‑neutral managers face “degrossing” pressures that compress long‑short positions.

Elms cited concrete examples: AI infrastructure firms flooding the convertible market, a $2.5 trillion private‑equity dry‑powder backlog that will eventually spark merger‑arbitrage activity, and a systematic long‑volatility strategy that profited from the Japanese carry‑trade unwind and the recent oil price rally. He also described a forthcoming commodity‑equity product paired with a trend‑following overlay designed to amplify upside while providing protection during downturns.

For investors, the takeaway is clear: diversifying into multi‑strategy and alternative assets can cushion portfolios against heightened volatility and provide upside in sectors like AI, private‑equity deal flow, and commodities. As credit conditions tighten and macro uncertainty persists, low‑correlation, defensively hedged strategies are likely to attract growing capital allocations.

Original Description

When the going is good, investors are happy to chase high beta assets in the search for market-beating returns. But when the mood changes, they're often unprepared for how those same assets perform in a downturn.

But the current uncertainty and volatility has created what Janus Henderson's David Elms describes as an "opportunity-rich environment" for multi-strategy investing, like that employed by the Janus Henderson Global Multi-Strategy Fund.

In this interview, he explains what's been working across the fund's market neutral strategies and how they're thinking about portfolio protection.

Time codes

0:12 - Inflection point for markets

0:40 - Importance of low correlation investing right now

1:24 - The opportunities in convertible bonds

2:42 - The opportunities in equity repo

4:33 - How fundamentals are overlooked in favour of macro and geopolitics

5:28 - The opportunities in Event Driven strategy

6:52 - How they're thinking about portfolio protection

8:27 - Playing the commodities cycle