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Systematic hedge funds shine in Q1

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Systematic hedge funds, which employ algorithms to identify investable market trends, have significantly outperformed other fund strategies during the first quarter of the year, according to a report by MarketGuru.

The report cites erratic market conditions fuelled by geopolitical tensions as contributing to the outperformance of the funds, which have seen an average gain of nearly 9% in the first two months of 2024, way ahead of the wider industry average gain of 2.6%, according to data from Barclay’s prime brokerage division.

The success of these funds is a reflection of the volatile nature of global markets and the varying fortunes across different regions and assets, according to a MarketGuru with the US S&P 500 index having seen an increase of over 11% so far this year, while Hong Kong’s Hang Seng index has dipped by about 2%. Japan’s Nikkei index, meanwhile is up over 20%, with European stocks and China’s market seeing more modest gains.

The systematic strategies that have generated the highest gains have been those that have embraced greater risk, with the top 10 trend funds, which have seen a 20% return YTD, allowing almost two-thirds more volatility than their peers, but even funds with lower risk thresholds have seen substantial gains, according to a the report.

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