GMO’s year-end letter argues that extreme value–growth dispersion remains intact, sustaining the opportunity set for its market-neutral Equity Dislocation strategy
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2025 returns reached 15.8% gross (13.4% net); since Oct 2020 inception, cumulative performance totals 69.3% gross (50.6% net), with modest negative beta (-0.18) to MSCI ACWI.
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U.S. value trades near the 4th percentile of historical relative valuation; a reversion to median implies ~70% value outperformance in the U.S. (~50% globally).
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Both long (+33.0%) and short books added alpha in 2025; speculative cohorts (e.g., unprofitable tech, most-shorted names) led post–“Liberation Day” rallies.
Is the spread cyclical noise—or structural excess awaiting mean reversion? The full letter details positioning and risk controls.
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