March’s market volatility upended returns for some of the world’s largest hedge funds, with systematic and nimble multi-strategy funds emerging as the biggest winners, while larger, equity-focused firms suffered losses, according to a report by Reuters citing a client note from UBS.
Market turbulence, fuelled by German policy shifts and heightened US tariff uncertainty, led to the steepest weekly selloff in German 10-year bonds since 1990, the euro’s strongest monthly gain since 2022, and the S&P 500’s largest weekly decline in six months. Against this backdrop, hedge funds cut equity exposure, and major players faced margin calls that forced traders to bolster cash reserves in increasingly risky markets.
“Multi-strategy funds acted swiftly to raise liquidity, mitigate drawdowns, and preserve gains in other asset classes such as swap spreads and macro trades,” the UBS report stated.
However, performance varied widely among top-tier multi-strategy firms. Citadel and Millennium Management posted quarterly losses of -0.8% and -2%, respectively, according to sources. In contrast, ExodusPoint recorded a 3.5% gain for Q1, bolstered by a strong March performance, while Balyasny Asset Management ended the quarter up 2.5%.
Singapore-based Dymon Asia Capital also posted solid returns, closing the first quarter with a 2.8% gain.
Hedge funds with systematic trading approaches capitalised on March’s market swings, particularly those deploying managed futures and quantitative strategies. AQR Capital Management, led by billionaire investor Cliff Asness, saw several of its funds post positive first-quarter returns. AQR’s Apex Strategy returned 9% in Q1, while its Managed Futures Full Strategy delivered an 8.2% gain, benefiting from a balanced long-short positioning and arbitrage opportunities.
Global macro fund EDL Capital, run by veteran trader Edouard de Langlade, emerged as one of the standout performers, returning 22% in Q1 after a 14% surge in March alone. The fund profited from currency and bond trades tied to shifting global macroeconomic trends.
Bridgewater Associates’ flagship Pure Alpha 18% Volatility fund also posted a strong first quarter, gaining 9.9%.
Hedge funds with long and short equity exposure broadly underperformed, with Goldman Sachs reporting a -2.4% decline for stock-picking strategies in March. Meanwhile, systematic stock traders gained over 4% during the month, highlighting the divergence between discretionary and quant-driven approaches.
