Tail-risk hedge fund Universa Investments delivered a 100% return on capital in April amid renewed market turbulence tied to US tariff policy shifts, according to a report by Reuters citing information from one of the fund’s investors.
The Miami-based firm, which manages approximately $20bn, is known for its “black swan” strategy – designed to protect portfolios during extreme market dislocations. Universa’s approach involves the use of derivatives such as stock options and credit default swaps to profit when volatility spikes, acting like a form of insurance against systemic market shocks.
The latest surge in performance came during a rocky month for markets, as tariff rhetoric from the administration of former President Donald Trump rattled investor sentiment. Universa’s founder and CIO, Mark Spitznagel, declined to confirm the performance figure but reiterated his broader market concerns.
“I expect a euphoric high before it’s over,” said Spitznagel. “But when that happens… it’s going to be the worst crash I think that we will have seen in our lifetime.” He warned that US equity markets could eventually fall as much as 80%.
Despite April’s turmoil, Spitznagel characterised the month’s market disruption as a “temporary blip” and maintained a medium-term bullish stance, expecting markets to remain in a so-called “Goldilocks” zone—neither too hot nor too cold—before a potential downturn.
Universa, which counts The Black Swan author Nassim Nicholas Taleb as its scientific advisor, has a track record of outsized returns during crises. The fund reportedly posted a 4,000% gain in March 2020 as the Covid-19 pandemic triggered a global selloff. Since its inception in 2007, Universa has generated an average return on capital exceeding 100%.
Looking ahead, Spitznagel raised concerns about the US Federal Reserve’s policy stance, warning that the central bank is “way behind the curve” as it holds interest rates at historically elevated levels despite signs of economic softening. “This crash is going to come eventually,” he added.
The Fed last week opted to keep rates in the 4.25%–4.50% range, citing an uncertain outlook clouded by inflation risks and global trade tensions.
