Multi-Strategy Funds Perform Well in Falling Market

April 2, 2020 James Heinsman Hedge Fund News

Stocks have just had their worst performance during the last three months, yet multi-strategy hedge funds that bet on a wide range of markets using teams of traders, centralized risk management and leverage, are doing well.

One example is Balyasny Asset Management. This firm finished Q1 with a 4.8 percent gain, with a 3.7 percent growth just in March. Another firm, Verition Fund Management watched its Multi-Strategy Fund return 4.5 percent in 2020 with 3.75 percent growth just in March. Another multi-strategy fund, Cinctive Capital Management, grew by 3.25 percent with a 1.5 percent gain in March.

Multi-strategy funds are consciously created to withstand volatility by reducing market exposure, balancing between long and short positions. This is why they do better, generally, when funds that are riskier crash in volatile markets.

On average hedge funds lost 6.9 percent so far this year, according to HFRX Global hedge Fund Index. Some funds did much worse. Well-known funds like Greenlight Capital lost 21.5 percent and Renaissance Technologies’’ RIEF fund lost 14.4 percent in Q1.

The chief investment officer at Northland Wealth Management in Toronto explained that multi-strategy hedge funds, such as Citadel, come from a past world of more lucrative hedge fund investing when managers coaxed great performance from their funds no matter which way the markets were heading.

“The ability to go anywhere and do anything really makes a difference – they are designed to protect capital,” Arthur Salzer, the CIO of Northland Wealth Management said.

Balyasny Asset Management, Cinctive Capital Management, Multi-Strategy Funds, Verition Fund Management,

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