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3 hours ago
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Analysis-Trend hedge funds struggle as more nimble macro funds embrace whipsawing markets
By Nell Mackenzie LONDON (Reuters) -Hedge fund returns so far this year show a stark divide between those that have been able to navigate U.S. President Donald Trump's erratic decision making and switch tactics quickly and those hemmed in by algorithmic strategies. Systematic hedge funds, whose algorithms ride market trends until they peter out, are down over 11% so far this year to end-May, according to a Societe Generale client note seen by Reuters this week. Global funds such as Systematica, Transtrend and Aspect Capital - between them managing almost $30 billion - run strategies that are down around 18.5%, 16.3% and 15% respectively, according to Transtrend's website and two sources close to the matter. The funds declined to comment. In contrast, hedge funds that use their discretion on the timing of trades and the asset classes they choose were up almost 7% by the end of May, data from hedge fund research firm PivotalPath shows. "Trend funds have been whipsawed and haven't been able to latch on to any consistent trend," said PivotalPath's head of manager relations, Gwyn Roberts. "Every time trend funds have begun to latch on to a market move this year, it has changed." The broadest index of European stocks gained around 10% from the start of the year to February 28 before falling by 20% over two weeks from March 25, a period that included Trump's April 2 Liberation Day tariff announcement. U.S. stocks trod a similar rocky path. The "worst" positions causing negative returns for trend funds included U.S. Treasuries, the Australian dollar, Japanese government bonds and in May, coffee, SocGen's report said. However, the dispersion between the two types of hedge funds has narrowed since April as markets swung back again. MACRO UP Discretionary macro hedge funds have achieved broadly positive returns over the first five months of the year. Rokos Capital Management, with $22 billion in assets, had returned 9.5%, according one source, with EDL Capital up 24%, according to a second. Brevan Howard's Alpha Strategies was up 4.32%, although its flagship fund is down 2.12%, said a third source. Macro traders in general have averaged an 8.5% annual return while managed futures traders, which include trend funds, have averaged a 7.2% annual return since PivotalPath began collecting data in 1998, with discretionary macro traders increasing that to an average of 9.6% since 2001. "Managed futures tend to be used in investor portfolios as a defensive allocation, which performs well when other strategies struggle," said PivotalPath's Roberts. Some large hedge funds have both macro and trend funds, which buffer each other. Man Group's systematic AHL Alpha Programme is down 10.6% for the year but its multi-strategy fund is up around 5.4%, according to the hedge fund's website. AQR Capital Management, which oversees $135 billion, posted a 10.6% return in its multi-strategy Apex fund to end-May. Bucking the trend, its Helix alternative trend strategy was also up, by 7%, although flat last month as it contended with reversals across interest rate swaps and yield curves. An almost 9% return in Graham Capital Management's Multi-Alpha Opportunity fund this year offset an 8.7% fall in its Tactical Trend fund, according to SocGen. Graham declined to comment on the results, but the founder of the $20 billion hedge fund, Ken Tropin, told Reuters that when trends "reverse violently", it "generally hasn't paid to overreact and deviate from trading models that have historically performed well in a variety of market cycles". In a note to clients, Adam Singleton, CIO of Solutions at Man Group, said May was a mixed month for discretionary macro strategies, adding that positions betting on a rise in stocks, the euro and the yen boosted performance while certain relative fixed income trades had hurt some. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 hours ago
- Business
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Analysis-Trend hedge funds struggle as more nimble macro funds embrace whipsawing markets
By Nell Mackenzie LONDON (Reuters) -Hedge fund returns so far this year show a stark divide between those that have been able to navigate U.S. President Donald Trump's erratic decision making and switch tactics quickly and those hemmed in by algorithmic strategies. Systematic hedge funds, whose algorithms ride market trends until they peter out, are down over 11% so far this year to end-May, according to a Societe Generale client note seen by Reuters this week. Global funds such as Systematica, Transtrend and Aspect Capital - between them managing almost $30 billion - run strategies that are down around 18.5%, 16.3% and 15% respectively, according to Transtrend's website and two sources close to the matter. The funds declined to comment. In contrast, hedge funds that use their discretion on the timing of trades and the asset classes they choose were up almost 7% by the end of May, data from hedge fund research firm PivotalPath shows. "Trend funds have been whipsawed and haven't been able to latch on to any consistent trend," said PivotalPath's head of manager relations, Gwyn Roberts. "Every time trend funds have begun to latch on to a market move this year, it has changed." The broadest index of European stocks gained around 10% from the start of the year to February 28 before falling by 20% over two weeks from March 25, a period that included Trump's April 2 Liberation Day tariff announcement. U.S. stocks trod a similar rocky path. The "worst" positions causing negative returns for trend funds included U.S. Treasuries, the Australian dollar, Japanese government bonds and in May, coffee, SocGen's report said. However, the dispersion between the two types of hedge funds has narrowed since April as markets swung back again. MACRO UP Discretionary macro hedge funds have achieved broadly positive returns over the first five months of the year. Rokos Capital Management, with $22 billion in assets, had returned 9.5%, according one source, with EDL Capital up 24%, according to a second. Brevan Howard's Alpha Strategies was up 4.32%, although its flagship fund is down 2.12%, said a third source. Macro traders in general have averaged an 8.5% annual return while managed futures traders, which include trend funds, have averaged a 7.2% annual return since PivotalPath began collecting data in 1998, with discretionary macro traders increasing that to an average of 9.6% since 2001. "Managed futures tend to be used in investor portfolios as a defensive allocation, which performs well when other strategies struggle," said PivotalPath's Roberts. Some large hedge funds have both macro and trend funds, which buffer each other. Man Group's systematic AHL Alpha Programme is down 10.6% for the year but its multi-strategy fund is up around 5.4%, according to the hedge fund's website. AQR Capital Management, which oversees $135 billion, posted a 10.6% return in its multi-strategy Apex fund to end-May. Bucking the trend, its Helix alternative trend strategy was also up, by 7%, although flat last month as it contended with reversals across interest rate swaps and yield curves. An almost 9% return in Graham Capital Management's Multi-Alpha Opportunity fund this year offset an 8.7% fall in its Tactical Trend fund, according to SocGen. Graham declined to comment on the results, but the founder of the $20 billion hedge fund, Ken Tropin, told Reuters that when trends "reverse violently", it "generally hasn't paid to overreact and deviate from trading models that have historically performed well in a variety of market cycles". In a note to clients, Adam Singleton, CIO of Solutions at Man Group, said May was a mixed month for discretionary macro strategies, adding that positions betting on a rise in stocks, the euro and the yen boosted performance while certain relative fixed income trades had hurt some. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
03-06-2025
- Business
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Factbox-Hedge funds lifted by stocks, stymied by bonds in May, say sources
By Nell Mackenzie and Summer Zhen LONDON (Reuters) -Hedge funds made gains in May on a weaker dollar and by exploiting market dislocations following April's global trade shock but faced losses in whipsawed commodities and fixed income markets, according to sources and bank research. Stocks bounced back last month as tariff worries ebbed while bond markets sold off as worries about high debt levels in big economies such as the United States and Japan resurfaced. Hedge funds globally returned a positive monthly return of 3% as of May 29, a JPMorgan prime brokerage note sent to clients on Friday and seen by Reuters on Monday showed. Industry returns were up 5% for the year so far, the note said. Stock picking hedge funds posted a 3% performance in May, while multi-strategy hedge funds trading many different strategies under one roof returned 2.5% and quantitative equity funds using systematic strategies returned 4.2%, the note said. Singapore's $1.1 billion multi-strategy hedge fund Arrowpoint Investment Partners benefited from exploiting markets roiled by tariff shocks and sees more arbitrage opportunities ahead, its chief investment officer told Reuters. Billionaire investor Cliff Asness's $135 billion hedge fund AQR Capital Management saw gains from stock selection and corporate arbitrage in its Apex Strategy, which returned a 2.4% May return net of fees, said a source. Systematic and trend following programmes that traded in stock markets were helped by their stock holdings. AQR's Helix Strategy, which follows market trends, was flat in May but has delivered a 7% return for 2025 through the end of May, as positive returns from stocks were offset by reversals across interest rate derivatives and trades which play differences across different bond tenors, said the source. London-listed Man Group's AHL Alpha fund returned a negative 2.19% for May and is down around 11% while its multi-strat fund had a positive May and has returned around 5% so far this year, said the fund's website. Systematic funds, which have limits on how much volatility their fund can tolerate have in recent months had to ditch trades, both losing and winning, even when the uncertainty roiling markets has been temporary, said an article written by portfolio managers at Man Group's AHL strategy in April. Fund/Hedge fund May return YTD return Dymon Asia Capital 3.3% 8% Arrowpoint Investment Partners ~3% AQR Apex Strategy 2.4% 10.6% AQR Helix Strategy 0.0% 7.0% AQR Delphi Long-Short Equity Strategy 1.8% 13.9% Man Group AHL Alpha Programme -2.19% -10.61% Man Strategies 1783 1.11% 5.35% Transtrend -5.42% -19.07% Mount Lucas Management -0.80% 2.55% Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-06-2025
- Business
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Hedge funds buy stocks at quickest pace since Nov 2024, Goldman Sachs says
By Nell Mackenzie LONDON (Reuters) -Hedge funds bought global equities last week at the quickest pace since November 2024, Goldman Sachs said in a note, just as stock markets ended the month with their most positive May performance in decades. The S&P 500 advanced just over 6% in May, its biggest monthly rise since November 2023 and its best gains for the month of May since 1990. The Nasdaq rallied about 9.6%, which was also its biggest monthly gain since November 2023 and its best May performance since 1997. Hedge funds ended the week bullish in every global region, led by North America and Europe, the Goldman Sachs report said. Technology companies attracted the highest interest, with hedge funds accumulating the largest weekly number of net long positions in the sector in over five years. Buying centered on firms integral to the artificial intelligence industry, including semiconductor manufacturers, technology hardware producers and electrical equipment companies, the report said. North American tech companies were favoured by hedge fund trades, followed by European counterparts, Goldman Sachs said. The pan European stock index returned more than 5% in May. Hedge funds bought European stocks for the third straight week and at the fastest pace in three months, the Goldman note said. Companies in Spain, France, Finland, Germany, Sweden and Denmark were the most net bought markets this week, while Ireland, the Netherlands and Switzerland were the most net sold, said the Goldman report. European stock sectors bought by global hedge funds last week included consumer discretionary, financial, health care and communications companies, the data showed. Hedge funds mostly bought single stocks but also made some long trades in stock indexes too, said Goldman Sachs. A long position expects an asset price to rise. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-06-2025
- Business
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Hedge funds buy stocks at quickest pace since Nov 2024, Goldman Sachs says
By Nell Mackenzie LONDON (Reuters) -Hedge funds bought global equities last week at the quickest pace since November 2024, Goldman Sachs said in a note, just as stock markets ended the month with their most positive May performance in decades. The S&P 500 advanced just over 6% in May, its biggest monthly rise since November 2023 and its best gains for the month of May since 1990. The Nasdaq rallied about 9.6%, which was also its biggest monthly gain since November 2023 and its best May performance since 1997. Hedge funds ended the week bullish in every global region, led by North America and Europe, the Goldman Sachs report said. Technology companies attracted the highest interest, with hedge funds accumulating the largest weekly number of net long positions in the sector in over five years. Buying centered on firms integral to the artificial intelligence industry, including semiconductor manufacturers, technology hardware producers and electrical equipment companies, the report said. North American tech companies were favoured by hedge fund trades, followed by European counterparts, Goldman Sachs said. The pan European stock index returned more than 5% in May. Hedge funds bought European stocks for the third straight week and at the fastest pace in three months, the Goldman note said. Companies in Spain, France, Finland, Germany, Sweden and Denmark were the most net bought markets this week, while Ireland, the Netherlands and Switzerland were the most net sold, said the Goldman report. European stock sectors bought by global hedge funds last week included consumer discretionary, financial, health care and communications companies, the data showed. Hedge funds mostly bought single stocks but also made some long trades in stock indexes too, said Goldman Sachs. A long position expects an asset price to rise.
