March 2026 Investor Letter
To our valued investors and friends,
Fund Performance
March tested the resolve of equity markets—and validated the discipline of systematic risk management. The S&P 500 posted a return of (-5.0%) for the month, its steepest monthly decline in over two years, driven by an unprecedented convergence of geopolitical disruption, energy market dislocation, and accelerating uncertainty around monetary policy. Against this backdrop, the BWC Founders Fund delivered +0.3% net of fees—preserving capital and generating +5.3 percentage points of outperformance versus the benchmark.
| BWC Founders Fund | S&P500 Total Return (SPXTR) | Δ Vs. (SPXTR) | |
|---|---|---|---|
| March 2026 | +0.3% | (-5.0%) | +5.3% |
| YTD 2026 | +12.9% | (-4.3%) | +17.2% |
| Cumulative Net Return (Since Inception) | +45.7% | +13.1% | +32.5% |
Year-to-date, the Fund has delivered +12.9% net of fees compared to the benchmark’s (-4.3%), representing 17.2 percentage points of outperformance through the first quarter. Since inception in March 2025, the Fund’s cumulative net return of +45.7% now exceeds the S&P 500’s +13.1% by 32.5 percentage points—generating more than 3.4x the benchmark’s return over the same period.
This sustained alpha generation has been achieved alongside superior risk management and reduced drawdown during the month. In March, the Fund’s realized Beta of 0.51—roughly half the market’s movement—reflects a deliberate, systematic reduction in exposure as risk signals intensified. A Downside Capture Rate of just 27.5% for the month demonstrates that on the average down day, the Fund captured only a fraction of the benchmark’s loss. This asymmetric return profile—participating meaningfully in upside while systematically limiting downside—is the hallmark of disciplined, rules-based portfolio construction.
For detailed performance statistics, risk metrics, and monthly returns, please refer to the enclosed Summary Factsheet.
The Five Forces — March Through a Systematic Lens
At Blackworks Capital, every investment decision is filtered through our Five Forces Framework—a systematic taxonomy of the primary drivers of market prices. Rather than reacting to headlines or forecasting outcomes, we translate these forces into measurable, objective signals that govern portfolio positioning. March provided a compelling case study in how multiple forces converged simultaneously—and how systematic discipline navigated the resulting complexity.
Force 1: The Macroeconomic Imperative
The macroeconomic landscape shifted materially in March. The ongoing US/Israel military campaign against Iran continued to disrupt energy supply chains through the Strait of Hormuz—a chokepoint for nearly 20% of global oil production. While the initial price spike of 35% in early March was followed by reversal and period of upwards consolidation, oil prices remained volatile throughout the month with prices remaining above $100/bbl as of the date of this letter. Jet fuel pricing in Asian markets, which saw increases exceeding 150% in the first week of the conflict, continued to weigh on regional transport, manufacturing, and economic activity across China and broader Asia.
For our systematic framework, this represents a potential regime shift. Elevated energy costs flow directly into consumer prices and manufacturing inputs, increasing the probability of a stagflationary environment—slowing growth coupled with persistent inflation. This creates intensifying tension within the Federal Reserve’s dual mandate: the need to support employment while containing prices. Should oil prices remain elevated, the risk of recessionary conditions increases while inflationary pressures simultaneously prevent aggressive monetary easing.
Force 5: Human Psychology and Behavioral Extremes
March was a month where behavioral forces amplified the impact of fundamental events. The intersection of geopolitical fear, AI-driven disruption anxiety, and eroding economic confidence created a feedback loop of sentiment-driven selling—precisely the environment where systematic discipline provides its greatest edge.
The AI-driven transformation of the technology sector accelerated meaningfully. Block (NYSE: XYZ) announced a 40% reduction in headcount attributed directly to AI—one of the most significant signals yet that AI disruption is moving from theoretical to tangible. The iShares Software Sector ETF (CBOE: IGV) extended its decline to approximately -24.9% YTD, dramatically underperforming both semiconductors and the broader market. This extreme sector dispersion—investors simultaneously pricing transformative value for AI enablers while aggressively discounting vulnerable companies—reflects the behavioral whiplash between euphoria and fear that defines Force 5.
Concurrently, the combination of an active military conflict, unprecedented energy volatility, and elevated valuations created conditions ripe for broader behavioral extremes. Markets moved not just on fundamentals, but on cascading fear—investors extrapolating worst-case scenarios and de-risking aggressively. Human psychology does not process risk linearly; it overweights recent negative events and drives selling pressure that often overshoots fundamental value.
Outlook & The Systematic Advantage
As we enter Q2 2026, these forces remain active and interconnected. Long-term trends are constructive but weakening, and consensus 2026 earnings growth estimates—hovering near 10%—face increasing headwinds from both the macro environment and shifting market leadership. These are precisely the conditions where systematic, multi-strategy frameworks provide their greatest edge.
Our conviction lies not in macro-forecasting, but in the disciplined execution of objective, rules-based logic. This systematic framework provides a critical advantage in the current environment:
Remain Positioned with Discipline: Our models will not prematurely abandon a defined uptrend based on short-term noise or speculative predictions. As long as systematic signals remain constructive, we remain positioned to capture continued gains. When signals deteriorate, the system de-risks automatically—as it did in March.
Dynamic Risk Control: Should market conditions continue to deteriorate and our models signal a sustained trend reversal, they are constructed to systematically increase hedging and reduce exposure. March’s realized Beta of 0.51 demonstrates this capability in action.
Disciplined Opportunism: Periods of elevated dispersion and intermittent volatility—precisely the conditions we face today—are environments where our momentum, mean reversion, and volatility focused strategies are designed to monetize price dislocations while controlling risk.
The first quarter has demonstrated the Five Forces framework at its most valuable. Through a market that sent the S&P 500 down -4.3%, the BWC Founders Fund generated +12.9% net of fees—not through prediction, but through systematic discipline.
This Fund was built to manage the Founder’s own capital. Every dollar of investor capital sits alongside ours, facing the same risk, the same drawdowns, and the same rules. That is why risk management is never an afterthought here—it is the reason the Fund exists. When we protect capital in a month like March, we are protecting our own alongside yours.
We invite you to join us as we continue to navigate this complex market environment with the discipline, transparency, and alignment that define Blackworks Capital.
Thank you for your continued partnership.
BWC Founders Fund
Rogan McGillis
Founder & Fund Manager