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Month in review: S&P 500 and Nasdaq gains take shine off hedge fund returns

Related Topics

  • Jain lowers fundraising expectations 
  • Millennium backs new macro firm
  • Digital assets funds set for big year

 

By Mark Kitchen
Head of Intelligence, Hedgeweek


 

As ever, hedge fund news in the first month of the year was dominated by last year’s returns, with lots of positives from the likes of Citadel (15.3%), Millennium Management (10%), DE Shaw (10%), Rokos Asset Management (8.8%) et al. Taken in the context of the S&P 500’s 23% gain for the year though, and the Nasdaq’s even more formidable 43% return on the back of the continuing tech-driven rally in US stocks, their high single- or low-double digit returns weren’t that much to shout about.

There were some S&P 500 busters though, including Discovery Capital’s macro fund, which put on 48%, Light Street Capital’s tech and media sector-focused Mercury fund (46%), Brevan Howard’s Digital Multi-Strategy Fund (44%), Hamza Lemssouguer’s Arini Credit Master Fund (32%), and Tiger Global Management, which snapped a two-year losing streak with 28.5% gain.

Some digital assets funds fared even better with Nickel Digital’s Digital Liquid Venture Fund scoring a 138.2% for the year, and Parataxis Capital Management’s Absolute Return Fund recording a bumper 341% annual return on the back of winning bets on both bitcoin and solana. 

And 2024 is already shaping up to be a big year for digital funds following the SEC’s decision to permit the creation and trading of spot bitcoin exchange-traded funds. By month end, the newly launched ETFs had seen inflows totalling a combined $5.94bn. Digital assets fund trading volumes meanwhile, also surged to a new record weekly high of $17.5bn in January, compared to an average of $2bn per week in 2022.

Last year also proved a good year for activist funds, which bounced back from average 16% losses in 2022, to notch an average 20.2% gain in 2023, with ValueAct Capital (39%), Caligan Partners (37%), and Legion Partners Asset Management (35%), leading the way.

Among last year’s losers meanwhile, Haidar Capital Management stands out with the firm’s flagship Jupiter macro fund flipping from a record 193% gain in 2022 to a 42% loss in 2023.

Despite 2023 proving a difficult year for many macro managers though, January brought news that multi-strategy major Millennium Management has agreed to provide $3bn to support the launch of Taula Capital, a new trend-following firm by former Millennium Portfolio Manager Diego Magia.

The firm, which is expected to begin trading in the first half of the year, is targeting between $4bn and $5bn of investor capital, which would make it the largest launch in over a year.

The year’s biggest launch was widely expected to be Bobby Jain’s new multi-manager hedge fund firm Jain Global, which was scheduled to open its doors in July with $8bn to 10bn in assets. Fundraising hasn’t been all that straightforward it would seem though, with the firm reportedly struggling to hit that target, despite offering steep fee discounts to early investors. Jain has subsequently set his sights on a still not-too-shabby $5bn-$6bn of assets. 

Back with the activists, and the battle for boardroom influence at Disney continued through January with  Blackwells Capital nominating three candidates for election to the entertainment giant’s board of directors. Trian Fund Management subsequently formally named its own candidates, including founder Nelson Peltz, who Disney has accused of failing to come up with a “single strategic idea” for the company throughout two years of campaigning for a seat on the board.

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