Splash247: Seahawk pitches shipping volatility as portfolio diversifier

Published by Splash247

Frankfurt-based Seahawk Investments has published new research arguing that the sharp divergence between shipping and energy subsectors can be turned into a source of portfolio diversification through long-short equity investing.

Seahawk, the investment management arm of maritime and aviation advisory group Transport Capital, said different freight markets rarely move in lockstep, creating opportunities to trade the relative performance of companies exposed to container shipping, tankers, dry bulk, logistics, aviation and energy.

The study centres on the Seahawk Equity Long Short Fund, which has operated since May 2019 and uses fundamental analysis to take both long and short positions across transport and energy stocks. The investment universe includes shipping, freight and logistics, rail, airlines, aircraft and ship financing, renewables, utilities and conventional energy.

Seahawk said the approach could help investors reduce their reliance on traditional equity and bond allocations, which have offered less protection since the historically negative correlation between the two asset classes turned positive.

Using Bloomberg data covering the period from May 2019 to the end of March 2026, Seahawk compared a portfolio comprising 40% MSCI World equities and 60% euro investment-grade bonds with one in which half the equity allocation was replaced by the long-short fund.

According to Seahawk’s calculations, the revised portfolio lifted the Sharpe ratio, a measure of risk-adjusted return, from 0.49 to 0.73. Annualised returns increased from 4.71% to 5.26%, while volatility fell from 7.02% to 5.45%.

The study also tested a 30% allocation to the fund within an equity-heavy portfolio. That mix produced an annualised return of 12.66%, compared with 11.89% for the MSCI World, while reducing volatility by 3.37 percentage points and lifting the Sharpe ratio from 0.62 to 0.83.

Seahawk reported that the fund had a correlation of 0.27 with the MSCI World and negative 0.05 with the bond benchmark during the period, indicating that performance was largely independent of broader equity and fixed-income markets. The figures are based on Seahawk’s own calculations with annual portfolio rebalancing.

The strategy seeks to exploit the different supply-and-demand cycles within transport and energy. A tanker owner may benefit from firm freight rates while a container carrier is weighed down by overcapacity, while orderbooks, commodity prices, production quotas and regulation can produce further differences between individual stocks.

Seahawk’s June fund update showed that dispersion continuing across shipping equities, with crude tanker stocks outperforming while product tanker and dry bulk names weakened. Long shipping positions detracted 0.4% during the month, while short positions added 0.1%.

Public shipping equities have long struggled to attract large institutional investors because of limited market capitalisation, governance concerns and their exposure to volatile freight markets. Seahawk’s approach seeks to trade those cycles rather than take a broad directional bet on shipping as a whole.