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The widening gap between hedge fund winners and losers

One thing to start with: Sequoia Capital Does not manage assets in the traditional sense, but the group – which is considered by many to be Silicon Valley’s leading venture capital firm – is definitely reshaping the investment landscape. here profile Of its new leader Blunt RolfA choice that shows a change in the balance of power in Sagiv’s office Apple, Google and ByteDance.

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The widest spread since the financial crisis

A market storm driven by Russia’s invasion of Ukraine and rising inflation Sharply divided Hedge fund industry, with macro hedge funds celebrating one of their best starts ever up to a year, while technology funds and growth funds cause 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 the data provider HFR, Which tracks the sector. The spread is one of the widest since the recent financial crisis.

Among the hardest hit from the struggles of consumer stocks, technology and growth were Tiger Global, Melvin Capital, Whale Rock and Riverpark. And the biggest winners were computer-driven and global macro names such as BH-DG Systematic Trading Foundation, Lada Bragaof Systematics, Aspect Capital and Bridgewater.

Meanwhile, mainstream fund managers have done just that Was denied By falling stock and global bonds in the first quarter, undermining the balanced approach of 60/40 which was the mainstay of investment portfolios for the year.

Thank you McKinsA £ 25.3 billion investment manager, Roper Capital manager, said:

“Conventional portfolios are in big trouble. Cross-correlations between assets are much higher than they used to be and there is an illusion of diversity in the industry. Everyone is doing worse than they thought they would.”

Elsewhere I will save And other fund managers in emerging markets Deal with further beatings For gains and worsening outflow, with investors retreating due to concerns about higher interest rates, the war in Ukraine and exposure to China.

Bank of America Has cut its earnings per share forecast to 6-9 percent for the first quarter of 2022 and expects managed assets to fall another 11 percent – among the heaviest projected falls for UK executives surveyed by the BoA. Other leading investors with large emerging market investments such as Aberdeen, Shredders and A group of men Are also exposed to these pressures.

The opposing director still sees value in Russia

How much writing is too much? After Russia invaded Ukraine and was hit by sanctions, most of the big asset managers Reduce the value in books Of their stocks and bonds in Russia to zero or somewhere close. For those with large positions, it has hurt the net asset value – but funds could reassure investors that the worst news has already come out.

Now comes the fund manager Dave Ivan Challenge this regular playbook. Chief Investment Officer of Copernicus Global Investors Told my colleague Brock Masters In New York he thinks complete erasures They are a “marketing ploy” That underestimates Russia’s potential and punishes current investors in hopes of generating future returns.

Copernicus, headquartered in Tampa, Florida, cut its stock valuation as Gazprom, Sberbank and Polyus An average of 70 percent and the invasion dropped about $ 700 million from its Russian assets. But Stone claims it would be a mistake to go further. he said:

“Marking them as zero is not fair because these companies probably still have a lot of value. If you mark it as zero, new people entering the fund get a bargain. Everyone who leaves the fund gets zero for something that is probably worth something.”

Stone also rejected calls to sell assets from Russia, comparing them to efforts to get investors to avoid fossil fuels. “The sale of Gazprom will not harm Russia in any way,” he said. “We all want less pollution and we all want peace in the world. Selling shares without a mind in a 90 percent drop is not a way to achieve those goals.”

Should Russia’s assets be marked as zero? Send me an email: harriet.agnew@ft.com

Table of the week

The U.S. government bond market is signaling concerns about an impending recession, but past experience suggests that the trend is not always a credible sign for the country’s stock market.

The “reverse yield curve” – when short-term government bonds offer higher yields than longer-term government debt – was generally perceived as an indicator of an impending economic contraction.

and At the end of last monthThis indicator flashed red as the yield on two-year US bonds briefly rose above the 10-year yield for the first time since 2019.

Deutsche Bank Has become one of the first major banks to say that its basic economic forecasts now include a recession starting at the end of 2023. More than half of the institutional investors surveyed about the reversal by Royal Bank of Canada They said they were “very concerned” or “somewhat concerned” about the yield curve and 42% said they expected a recession before the end of next year.

Still, it is May not translate For a fall in the stock market. The US S&P 500 index returned a median of 9% in the 12 months after reversing the previous yield curve and 16% for two years. Goldman Sachs.

The figures highlight the fact that although the bond market has a decent record as a warning sign, it often takes time to stretch. Markets also tend to recover faster from the wider economy – best illustrated by the rise following the initial wave of the corona plague.

10 stories not to be missed this week

Rokos Capital Management Looking for Move to Hong KongDespite years of social and political upheavals in the field that have pushed other companies, as the $ 13 billion fund managed by Chris Rocus Trying to recover from a difficult year.

Adelphi CapitalOne of the oldest hedge funds in London, is L Become a family office Following a recent run of poor performance, the latest sign is that stock managers are struggling to navigate a sharp sell-off in the markets.

The investors are Acquisition of agricultural land in the United States In search of protection against inflation, as a shortage of goods caused by Russia’s invasion of Ukraine is leading world food prices to peaks.

Berkshire Hathaway Acquired a stake in the computer and printer maker HP Inc. Worth $ 4.2 billion, e Third investment of billions of dollars By Warren BuffettThe group of in about a month.

BinanceAn affiliate in the US was Estimated at $ 4.5 billion In its first round of fundraising, much less the $ 8 billion price tag awarded to its rival FTX USABecause regulatory concerns obscure the forecast Changfeng ZhaoThe extensive network of crypto companies.

The senior global group of securities regulators has warned that the shock of the corona in corporate bond markets has revealed fault lines that need to be fixed to prevent further disruption to Market functioning and liquidityEspecially in stressful situations.

Black stoneAladdin’s software system may not bring the fund industry everything it wants Lex Tur loads. If most large investors were to use the same risk metrics they might make the same mistakes, Cultivating systemic instability.

Lex Also tackles the shopping spree among asset managers, arguing that higher rates will not do so Apply the brakes Mergers and Acquisitions.

Minister of the United Kingdom John Glenn Set Britain’s plan to become “Global Center” for the crypto industry, Including a portfolio of measures from the proposed new regulations for stable currencies to the Royal Mint NFT. Meanwhile, of Britain Financial Conduct Authority Plans for Increase enforcement Actions in financial services.

More private fund managers will hear A knock on their door By US financial regulators this year as ISA Exacerbates its policing on the thriving market of unlisted properties.

And finally

Allegory 'Knight's Vision' (circa 1504) by Raphael
Allegor ‘Knight’s Vision’ (circa 1504) by Raphael © National Gallery, London

“His life was short, his work fruitful and his legacy immortal. Painter, draftsman, architect, archaeologist and poet, Raphael Captured in his art the human and the divine, love and friendship, learning and power. In his short career, which lasted only two decades, Raphael shaped the course of Western culture like few artists before or since. “

This exhibition, Which has just opened at the National Gallery, is the most amazing thing I’ve seen all year. It explores that of Raphael An entire career, From his famous paintings and drawings to his works in architecture and poetry, and design for sculpture, tapestries and prints. I recommend reading Giorgio and Zariof The lives of the artists Hear how this giant of the Italian Renaissance was perceived by one of his contemporaries.

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