Key Takeaways
- • Jemekk Hedge Fund returned 1.12% in Q2 2026 and 4.83% year-to-date, underperforming the S&P 500 Composite (15.20% Q2, 10.21% YTD) and S&P TSX Composite (6.96% Q2, 11.17% YTD) despite solid since-inception performance of 808.76%.
- • A 14% decline in gold prices during Q2 created significant headwinds for the Fund's Precious Metals trade, with Gold Equity ETFs falling approximately 20%, dragging down holdings in Agnico, Alamos, and Equinox.
- • Index hedging—particularly on the US side—emerged as the largest performance detractor for the quarter, offsetting gains elsewhere in the portfolio and contributing materially to quarterly underperformance relative to benchmarks.
Summary
Jemekk Hedge Fund posted modest returns in the second quarter of 2026, generating a 1.12% gain despite significant headwinds from two primary sources: declining precious metals valuations and underperformance from index hedging positions. The fund's year-to-date performance of 4.83% lags both the S&P 500 Composite (10.21% YTD) and the S&P TSX Composite (11.17% YTD), marking a period of underperformance relative to broad equity benchmarks in a rising rate environment.
The fund's precious metals exposure proved particularly vulnerable in Q2 as gold prices declined 14%, a substantial move that cascaded through equity holdings in the sector. The leverage inherent in Gold Equity ETFs amplified this downward pressure, with these instruments falling approximately 20% during the period. This weakness directly impacted three significant portfolio positions: Agnico, Alamos, and Equinox all moved in sympathy with broader precious metals weakness, collectively representing a material drag on net fund performance.
However, the largest source of quarterly underperformance stemmed from index hedging positions, notably on the US side. These defensive positions, typically employed to reduce systematic market risk, proved costly in an environment where broad equity indices posted strong gains. The S&P 500 Composite surged 15.20% in Q2, making the opportunity cost of hedging particularly pronounced. This dynamic illustrates the ongoing tension between downside protection and return maximization in a bullish market regime.
Despite Q2 headwinds, Jemekk's since-inception performance of 808.76% underscores the strategy's long-term value creation, positioning it above the S&P TSX Composite's 895.75% but ahead of the S&P 500's 822.57% on a cumulative basis. The fund's exposure to rate-sensitive precious metals combined with systematic hedging creates structural challenges in rising-rate, risk-on environments but reflects a deliberate risk management approach oriented toward capital preservation alongside growth objectives.
The fund's precious metals exposure proved particularly vulnerable in Q2 as gold prices declined 14%, a substantial move that cascaded through equity holdings in the sector. The leverage inherent in Gold Equity ETFs amplified this downward pressure, with these instruments falling approximately 20% during the period. This weakness directly impacted three significant portfolio positions: Agnico, Alamos, and Equinox all moved in sympathy with broader precious metals weakness, collectively representing a material drag on net fund performance.
However, the largest source of quarterly underperformance stemmed from index hedging positions, notably on the US side. These defensive positions, typically employed to reduce systematic market risk, proved costly in an environment where broad equity indices posted strong gains. The S&P 500 Composite surged 15.20% in Q2, making the opportunity cost of hedging particularly pronounced. This dynamic illustrates the ongoing tension between downside protection and return maximization in a bullish market regime.
Despite Q2 headwinds, Jemekk's since-inception performance of 808.76% underscores the strategy's long-term value creation, positioning it above the S&P TSX Composite's 895.75% but ahead of the S&P 500's 822.57% on a cumulative basis. The fund's exposure to rate-sensitive precious metals combined with systematic hedging creates structural challenges in rising-rate, risk-on environments but reflects a deliberate risk management approach oriented toward capital preservation alongside growth objectives.
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