Global Hedge Funds Hit by Worst Monthly Losses Since 2022
Hedge funds saw their worst monthly drawdowns since 2022 as Iran conflict volatility hit stocks. Managers sold global equities at the fastest pace in 13 years.
Global hedge funds experienced their most significant monthly drawdowns in more than four years during March, as market volatility triggered by the conflict in Iran pressured the world's largest money managers. According to reports from several top Wall Street prime brokerages, including GOLDMAN SACHS GROUP INC, funds responded to the instability by selling global equities at the fastest pace in 13 years. This broad retreat occurred as major indices in the United States faced significant declines, with the SPDR S&P 500 ETF TRUST sliding 4.63% and the INVESCO QQQ TRUST SERIES 1 dropping 4.87% over the quarter. Large multi-strategy funds were hit particularly hard by the turbulence. Balyasny Asset Management saw its flagship fund decline 4.3% in March, while ExodusPoint faced a 4.5% drawdown during the same period. Citadel, founded by Ken Griffin, reported a mixed quarter with its Global Fixed Income Fund falling 8.2% in March, though its Tactical Trading fund managed a 1.8% gain. Meanwhile, Millennium Management saw its flagship fund slip 1.2% as the industry grappled with rapid market shifts. Bruno Schneller, managing partner at Erlen Capital Management, highlighted the severity of the market conditions. > "March 2026 stands out as one of the more demanding months for the hedge fund industry in recent years, driven by elevated volatility from the Iran war that resulted in rapid shifts in the currencies, commodities, equity and interest-rate markets." The downturn was felt across all major financial hubs, from Hong Kong to Singapore. Asia-focused long/short funds fell 7.3% in March, while European managers declined 6.3%. Analysts in India noted that the technology, media, and telecommunications sector was among the worst-hit, with specialized funds in that space dropping 7.8% during the month. Despite the widespread losses, systematic stock trading strategies bucked the trend by rising 1.1%, driven by alpha returns. However, gross leverage levels remained near record highs, even as North American markets saw the largest percentage of net selling since the start of the 2020 pandemic.
