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Pod-shop performance test
Multi-strategy operators, particularly large multi-managers, have been navigating their biggest performance test of the decade so far. Greater volatility and a rocky market outlook, including an equities selloff deepened by President Trump’s commitment to his tariff agenda, have sparked losses.
Here is what we know:
- Market action grew more turbulent last week, culminating in a selloff Thursday concentrated in tech and healthcare stocks, key trading focus areas for the platforms. Hedge fund stock pickers and multi-strategy funds gave up around half their average yearly gains on that day, according to a Goldman Sachs note reported by Reuters.
- There was a mass unwinding event on Friday, the largest amount in over two years, with some activity comparable to March 2020 at the start of the global pandemic, according to another GS note.
- Over the weekend it was reported Millennium had lost about $900m in the first two months of the year in declines tied to its index rebalancing trades, a strategy tied to companies joining and leaving stock market indexes.
- Millennium and Citadel both lost ground in the first week of March, according to Bloomberg, which reported that Citadel founder Ken Griffin had directed senior peers to “play offense” this week despite the maelstrom.
- But the general sentiment on the street is one of risk-off and holding steady until the turbulent outlook fades. President Trump’s continued commitment to enacting tariffs on key allies, in the face of stock market declines and even a possible recession, has undermined faith in the “Trump put”.
- The tone established last Thursday continued this week, with the Nasdaq down 4% Monday. Multi-manager pods rushed to unwind trades in crowded positions before hitting risk limits.
- The extent of the performance losses, and whether any shops were able to capitalise on the mass un-winding and general volatility to post gains, will be keenly watched in the coming days and weeks.
FCA drops ‘name-and-shame’ plans
The FCA has dropped its “Name and Shame” proposals which would have seen the subjects of financial investigations routinely named as soon as enquiries begin.
“Considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances, as we do today,” said Nikhil Rathi, chief executive of the FCA. Read more
Hedge Fund Power List 2025 ranking is out now 🚀
Bridgewater Associates maintains its long-held position as largest hedge fund manager. Here are the headlines from another busy year of big trades and strategic shifts among the 66 firms with $10bn or more in hedge fund assets:
- New York is the leading hub, followed by London.
- About a third now have a Middle-East office.
- Ten of the 66 are multi-strategy operators.
- Single manager equity specialists are the most represented.
- The $10bn+ group manage 40% of industry AuM.
Read the free preview here. AFI members can access the entire ranking here.
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