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Global Hedge Funds Face Steepest Monthly Drop in Two Years
2 Apr
Summary
- Hedge funds experienced their worst monthly drawdowns since January 2022.
- Stockpickers faced negative returns across all regions, with Asia-hit funds down 7.3%.
- Systematic trading strategies bucked the trend with positive returns in March.
Global hedge funds endured their most challenging month in March 2026, experiencing the steepest drawdowns since January 2022. This period of heightened market volatility, exacerbated by escalating geopolitical tensions in the Middle East and rapid shifts in interest rates and currencies, significantly impacted the performance of major money managers worldwide.
Fundamental long/short stockpickers reported negative returns across all geographic regions. Funds focused on Asia experienced the most substantial decline, dropping 7.3%, followed by European funds down 6.3%, and U.S. funds down 4.3% for March. The technology, media, and telecommunications (TMT) sector proved particularly detrimental, with long/short funds in this area losing 7.8% in March.
In contrast to the broader trend, hedge funds employing systematic stock trading strategies saw positive returns of 1.07% in March, driven by alpha generation. Despite widespread selling of global equities, which occurred at the fastest pace in 13 years, and increased gross leverage levels near record highs, these systematic approaches offered a buffer against the market turmoil.
Several large multi-manager funds experienced significant drawdowns. Balyasny Asset Management reported a 4.3% loss in March, and ExodusPoint saw declines of 4.5%. In Asia, funds like Pinpoint Asset Management and Dymon Asia also reported monthly losses, although some managed positive quarterly returns.
