Hedge Funds Suffer March Meltdown

Hedge Funds Suffer March Meltdown

almost 4 years ago2 mins

Mentioned in story

Some of the world’s most prominent hedge fund managers had their worst month ever in March, it emerged on Friday – and a spike in investor withdrawals has left Man Group, the biggest such publicly listed firm, entering survival mode 😫

What does this mean?

Hedge funds buy and short a wide variety of individual investments. Such selective strategies can allow them to profit when the wider market tanks – although it’s tough to make extraordinary gains when markets are rising.

Stock-picking funds had their best year in a decade in 2019, even if they returned just half the rise of the US S&P 500. But while a handful also managed to turn recent market volatility to their (and their investors’) advantage, three quarters of hedge funds lost money last month.

Article Image

Bridgewater Associates, for example, saw its flagship fund lose 16% in March – and things weren’t much better at UK-based Man Group. While some strategies made gains, others declined 30% as investors pulled cash from funds whose value was already shrinking 😭

Why should I care?

After years of significantly underperforming a booming US stock market, investors will be questioning the $3 trillion hedge fund industry’s ability to justify high fees through the promise of returns when things head south.

Still, investment managers of all descriptions have suffered client withdrawals recently – and Man Group's closure of several smaller funds could be a good thing if it lets the firm focus on its successful algorithm-based strategies. Investors in Man Group’s own shares (which form part of the UK FTSE 250index) accordingly sent their value up 4% on Friday.

Man Group still took in $500 million more cash from clients than they took out last quarter
Man Group still took in $500 million more cash from clients than they took out last quarter

And with Brevan Howard Asset Management’smain fund – also available, albeit indirectly, to average investors – posting its best month ever in March (it rose 18%), hedge funds are unlikely to disappear anytime soon 🌝

PS: check out our Packs on Bill Ackman and Ray Dalio to learn more about how two of the industry’s titans invest.



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG