Multi-strategy hedge funds have made massive gains in the first six months of the year aided by the Federal Reserve’s efforts to prop up financial markets, according to the Financial Times.
- The big winners were: Chicago-based Citadel Advisors, Izzy Englander’s Millennium Management, and Dmitry Balyasny’s Balyasny Asset Management.
- Their double-digit gains indicate that the pandemic caused a massive split between more prominent hedge funds and the smaller ones.
Multi-strategy hedge funds have posted substantial gains for the first half of 2020 despite being unprepared for what hit them in March, the Financial Times reported on Friday.
During the start of the pandemic, the Federal Reserve stepped in to save the US economy from the pandemic by rolling out new efforts almost weekly since then by slashing rates to zero and re-activating large scale asset purchases.
After the Fed’s boost, the big multi-strategy hedge fund winners were Citadel Advisors, Millennium Management and Balyasny Asset Management, the FT said.
(AUM: Assets under management)
- Citadel Advisors: Gained 1.7% in June in its flagship Wellington fund. Up 13.3% year-to-date. (AUM: $30 billion)
- Millennium Management: Gained 2.9% in June. Up 10% in the first half of the year. (AUM: $42 billion)
- Balyasny Asset Management: Gained 2.5% in its Atlas Enhanced fund in June. Up 15% year-to-date. (AUM: $6.8 billion)
- Point72 Asset Management: Gained 1% in June. Up 3.9% year-to-date. (AUM: $14 billion)
Multi-strategy funds are designed in a manner to be less exposed to financial market volatility with long and short positions sized equally across portfolios.
Their risks are monitored to steer clear from trades with potential massive losses and to run winning bets.
The gains posted by these funds add to concerns that the pandemic caused a split between big hedge funds and the smaller ones, FT said.
While many large funds were able to attract investors and make money, smaller ones were left in the lurch.
Their double-digit wins are much higher than the average 1% posted by other funds this year to July 1, the newspaper said citing data from HFR.
In the first half of the year, the S&P 500 was down 4%.
– Financial Times