A market turmoil that prevents Russia from invading Ukraine and rising inflation Sharply divided the hedge fund industry, with macro hedge funds celebrating one of their best starts ever to a year, while technology funds and growth funds are accumulating double-digit losses.
The top 10 percent of hedge funds earned an average of 24.3% in the first quarter, while the bottom decile fell 15.4%, according to HFR, which tracks the sector. The spread is one of the widest since the financial crisis.
The industry as a whole suffered 0.3% losses in the first quarter, as measured by the HFRI weighted fund index, and larger funds tended to be more successful than smaller ones.
“I’m having a hard time thinking of a quarter with more diversification in quite some time,” said Michael Edwards, deputy chief investment officer of Weiss Multi-Strategy Consultants.
Stock hedge funds with many long-short stocks cut their exposure to U.S. stocks and reduced leverage when the market sold in January and February, nervous that there was still room for stocks to fall. ‘The Chief of Goldman Sachs.
This means that some funds missed a 9% rise in the S&P 500 from its February low, including many of the technology stocks that were hit hard earlier this year. This led the HFRI index to equity funds down 4%.
Tiger Global was Among the most severely injured: It dropped 34 percent in the quarter. Melvin Capital, Whale Rock and RiverPark’s Long / Short fund all saw declines of more than 20% in the quarter, with consumer stocks, technology and growth struggling more generally. The troubles with the technology were not limited to the U.S. Axando Capital lost 17.8% as one of its major holdings, Swedish telecom maker Hexatronic, returned some of last year’s gains.
In contrast, computer funds and macro funds rose strongly: the HFRI macro index rose more than 8% in the quarter.
These gains, Edwards added, stemmed in part from the fact that quantum macro funds were systematically traded. Without human sensitivity to be affected by the war in Ukraine, rising yields of the Ministry of Finance and sales in the markets, computer-driven funds rushed to re-enter the struggle compared to some managers of meat and blood hedge funds.
“The machines are not subject to the same Fomo [fear of missing out] And tendencies to lick wounds that conduct discretion are, ”he said.
Among the biggest winners this year were the BH-DG Systematic Trading Fund, run by a joint venture between hedge fund company Brevan Howard and former Manhattan Chase trader David Gorton. The fund rose 23% by the end of March, according to figures sent to investors.
Meanwhile, Lada Braga’s systematics has risen by almost 18%, with the help of commodity and bond bets, and Aspect Capital has risen by 21.5% in its diversified fund.
Bridgewater, the world’s largest hedge fund with about $ 150 billion managed, rose 16.3 percent. She told investors that her best performance came in commodities, short-term interest rates and nominal bonds.
Many of the winning funds use algorithms to predict and bet on trends and patterns in futures contracts and other financial markets. They won Huge sale In government bond markets this year, with two-year US bond yields soaring from 0.7% to 2.4% and 10-year yields soaring from 1.5% to 2.5% as the Federal Reserve moves to tighten monetary policy.
“So far this year [performance] It’s spectacular, “said Philip Jordan, president of Paris-based CFM, which manages about $ 9 billion and is rising around 17 percent in its discus strategy and 7 percent in its flagship fund Stratus. [quant] Trading in futures is better than it has been in the last ten years. ”
The HFRI Commodity Funds Index jumped nearly 25%, triggered by a one-third rise in the price of crude oil and a jump for natural gas of nearly two-thirds. Makuria Investment Management, which invests in commodities and companies involved in energy transition, earned 31%. “The tragic events in Ukraine have only accelerated existing structural trends already in the commodity markets… By increasing market opacity,” wrote founder Mans Larsson.
Other traders also benefited from the huge market moves in bonds and currencies. The Odey Asset Management European fund rose almost 61% by mid-March, aided by bets on rising long-term bond yields. He believes they have more to go. “There is nothing that holds the returns from here,” founder Crispin Uday said.
Equity hedge funds have had a much more difficult time. Funds that were positioned for price increases suffered losses because the stock markets were affected by the Ukraine war and the prospect of higher credit costs, and the bond markets sold quickly.
“Extreme volatility in the tariff market and b Ukraine The situation has provided a difficult risk environment for all types of assets, “said Kevin Russell, chief investment officer at UBS O’Connor’s hedge fund unit, which manages more than $ 11.2 billion in assets.
Market turmoil splits hedge funds into macro winners and tech losers Source link Market turmoil splits hedge funds into macro winners and tech losers