Frontier Funds Posts Widespread Q1 Losses

Despite net redemptions and falling asset values, the firm maintained liquidity and rebalanced holdings across its diversified fund family.

May 16, 2025

Capital Takes a Hit Across the Board

Frontier Funds released its Q1 2025 results, showing broad-based losses across its major investment strategies. While each fund faced a drop in net asset value, the firm stayed disciplined—meeting redemptions, preserving liquidity, and rebalancing portfolios as needed.

Every series in the Frontier lineup—Diversified, Masters, Balanced, Select, Long/Short Commodity, Global, and Heritage—saw negative returns. The Diversified Fund was down $136 million from operations, with NAV per unit falling over 14% in Class 2. The Balanced Fund posted the steepest hit, dropping more than $500 million from operations as private investment valuations fell sharply.

Losses weren’t isolated. The Masters Fund declined by $53 million, and the Long/Short Commodity Fund saw a $35 million reduction. Across these strategies, NAV per unit dropped between 12% and 30%, depending on the share class.

Performance Pressured by Private Markets

Private investment companies—many accessed through Galaxy Plus feeder funds—were the main source of underperformance. Frontier holds stakes in a mix of quant, macro, and contrarian strategies through funds like Aspect, Welton GDP, Quantica, and Quest. In Q1, these positions moved lower in value, and that pullback hit results hard.

In the Diversified Fund, for example, holdings in the Fort Contrarian and QIM feeder funds represented over a third of NAV at quarter-end. Those assets were marked down materially, and the impact showed up across the fund’s capital structure. Other series, like the Balanced and Select Funds, reallocated capital within their private investment mix, trimming exposure to certain managers and rotating into others.

Redemptions Met Without Disruption

Despite performance challenges, Frontier Funds stayed operationally steady. Redemptions were processed across all strategies without delay. Even in funds like the Balanced Fund—where NAV fell significantly—Frontier made good on outgoing capital while keeping enough liquidity in reserve. Cash positions declined in some funds but were supported by sales of private investments and redemptions receivable.

At the same time, the firm didn’t sit still. Allocations were rebalanced, and treasury exposure was maintained or slightly reduced. Frontier continued to report on these moves clearly in its financial statements, with full detail across each fund series.

NAV Compression Was Widespread

NAV per unit declined in every fund and share class. Class 2 units in the Global Fund dropped from $204.73 to $167.05. In the Heritage Fund, Class 1 fell from $83.51 to $68.11. Class 3 and 3a units, which often serve institutional investors, saw similar losses. Even more insulated classes like 1AP weren’t spared.

For the Balanced Fund, Class 2 units moved from $96.71 to $82.08, while the Long/Short Commodity Fund’s Class 3a slipped from $33.81 to $29.38. The declines reflected both market drawdowns and reduced exposure through redemptions.

AUM Pulls Back, but the Structure Holds

Assets under management declined across the Frontier platform:

The Balanced Fund fell from $3.76 billion to $3.19 billion.

Global and Heritage Funds each saw AUM drop by over $200 million.

Select Fund assets fell by roughly $140 million.

But even with this reduction, the firm preserved its structure. Subscriptions in advance for service fee rebates remained consistent. Trading and service fees stayed aligned with prior periods. There were no disruptions in cash flow, and no changes to internal controls were flagged.

Outlook Calls for Patience and Flexibility

Frontier’s report includes standard forward-looking language, cautioning that results may change due to external conditions. The firm did not provide performance forecasts, but its asset mix—concentrated in private, unconsolidated, and Treasury positions—suggests a continued focus on diversification and active management.

Volatility remains a key factor. Frontier’s funds are positioned across non-traditional asset classes, and Q1’s losses show that these strategies are not immune to short-term dislocation. But the firm’s actions this quarter—meeting redemptions, trimming exposure, and reallocating capital—show a commitment to staying agile.

Bottom Line

The first quarter of 2025 tested every Frontier strategy. NAVs declined, redemptions picked up, and private market valuations dropped across key holdings. But the firm managed its operations without disruption and adjusted allocations where necessary. As the year unfolds, investors will be watching closely to see how Frontier responds to a shifting environment—both in terms of market moves and capital flows.