Asian hedge funds, including Trivest Advisors, posted widespread losses in March as the escalation of the conflict involving the US, Israel, and Iran triggered sharp and rapid swings across global markets, catching many strategies off guard, according to a report by Bloomberg.
The turbulence proved particularly challenging for funds reliant on macro and directional positioning. Sudden shifts between risk-on and risk-off sentiment, driven by alternating headlines around military developments and ceasefire negotiations, created a volatile backdrop that disrupted positioning across asset classes.
Trivest Advisors’ China-focused strategy, which has navigated multiple market crises over its lifespan, recorded its steepest monthly decline to date, falling just over 10%. Southern Ridges’ Summit Macro Fund meanwhile, saw a similarly sized drop, marking its worst performance since launch, while Aspex Management also delivered a notable negative return for the month.
Industry data suggests losses were widespread across the region. Equity-focused hedge funds in Asia declined by mid-single digits on average, while macro strategies fared worse, reflecting the scale of dislocation across rates, currencies and commodities markets as the conflict disrupted energy supplies and fuelled inflation concerns.
Despite the difficult month, Asian managers generally outperformed global peers, aided by relatively limited exposure to some of the hardest-hit trades, particularly in European rates. Stronger performance earlier in the year also helped cushion first-quarter returns.
Market conditions have since stabilised following the announcement of a ceasefire, prompting a sharp rebound in performance. Equity hedge funds in the region have recovered a significant portion of March’s losses in April, supported by a broader recovery in regional equity markets.
Some managers have already recouped losses and returned to positive territory for the year. Quantitative strategies, in particular, have rebounded strongly, highlighting their ability to adapt quickly to shifting market signals.
The March sell-off exposed vulnerabilities in consensus positioning. Popular trades across currencies, equities and rates were unwound rapidly as investors reassessed expectations for growth, inflation and monetary policy. Positions linked to a weaker US dollar, stronger risk assets and continued economic expansion were among those hardest hit.
In contrast, a smaller number of funds that had hedged against downside risks or positioned defensively were able to limit losses or generate gains during the period.
