Tech rally hands hedge funds biggest gains since 2020

{"text":[[{"start":9.35,"text":"Hedge funds have enjoyed their best monthly performance since 2020, as managers profited from a blistering rally in technology stocks such as Intel, Alphabet and AMD. "}],[{"start":20.85,"text":"A global hedge fund index collated by data group HFR jumped 5 per cent in April, the biggest rise since November 2020, according to preliminary figures. The gains were driven by technology-focused funds, which surged 14 per cent over the month. "}],[{"start":37.75,"text":"“It has been a story of very strong performance across all strategies,” said Jon Feeney, co-chief investment officer of Investcorp-Tages, which allocates investor money to hedge funds."}],[{"start":48.65,"text":"Feeney pointed to strong corporate earnings, continued investment by the so-called tech “hyperscalers” and “some frankly exuberant behaviour on memory stocks”, adding that his firm’s client portfolios “had one of the best months for over 10 years”. "}],[{"start":63.349999999999994,"text":"The S&P 500 index of US blue-chip stocks soared 10.4 per cent last month, its biggest monthly gain since the November 2020 Covid-19 vaccine breakthrough, helped by a ceasefire in the US-Israeli war with Iran and strong earnings. The tech-heavy Nasdaq Composite rose 15.3 per cent, its best month since April 2020."}],[{"start":87.1,"text":"Alphabet jumped by around one-third last month, taking its market capitalisation to around $4.7tn, helped by strong cloud growth, while chip companies also had huge gains. Intel more than doubled while AMD soared 74 per cent. Sandisk, which specialises in memory chips, rose 73 per cent and is up about 412 per cent this year. "}],[{"start":111.3,"text":"Hedge funds’ net leverage, a measure of their borrowing, increased in April as managers bought more stocks than they sold, according to a note from the prime brokerage division of Goldman Sachs, which lends to hedge funds."}],[{"start":123.7,"text":"Eddie Fishman, a managing director at hedge fund DE Shaw, highlighted gains made by some of the biggest companies, including a number of the Magnificent Seven megacap tech stocks, which rebounded strongly during the month."}],[{"start":136.85,"text":"“Under the hood, it’s not just stocks rising proportionally in size, but some of the largest, most liquid companies like the Mag-7,” he said at the Milken conference in Beverly Hills. "}],[{"start":null,"text":"

"}],[{"start":147.95,"text":"Marshall Wace’s $23bn Eureka fund, a long-short equity fund, was up 7 per cent, bringing its gains this year to 7.9 per cent, according to a person who had seen the numbers."}],[{"start":159.29999999999998,"text":"Dmitry Balyasny’s Balyasny Asset Management saw its multi-manager flagship Atlas fund, which has traditionally had a large weighting in equities, gain 3.1 per cent over the month, although it was still down 0.8 per cent for the year. "}],[{"start":175.45,"text":"Multi-manager hedge fund giant Millennium was up 2.7 per cent in April and 3.6 per cent for the year, while Citadel gained 1.4 per cent in April for its flagship Wellington fund, putting it up 2.4 per cent for the year. "}],[{"start":189.5,"text":"Marshall Wace, Balyasny, Millennium and Citadel declined to comment."}],[{"start":194.8,"text":"The gains mark a dramatic rebound from March, when the industry suffered some of its worst losses since the outbreak of the Covid-19 pandemic in March 2020. "}],[{"start":204.20000000000002,"text":"Funds that had been anticipating interest rate cuts this year were among the hardest hit as war in the Middle East broke out, with markets violently changing direction to start pricing in rate increases to tackle an expected burst of inflation. Macro hedge funds, which bet on bonds, currencies and other assets, lost nearly 2 per cent in March according to HFR, although last month they rebounded 1.6 per cent. "}],[{"start":231.50000000000003,"text":"One hedge fund manager said losses had prompted investors to ask questions about the industry’s correlation to equity markets and the risk of funds being caught in crowded trades."}],[{"start":241.95000000000002,"text":"“Everyone in March was long rates, long the yield curve and short the dollar,” he said. “Investors were surprised that no matter how diversified they were, a lot of them were correlated.”"}],[{"start":252.70000000000002,"text":"Hedge funds historically have a strong correlation with equity markets. That is in part because, while many equity managers hold a mixture of long and short positions, they tend to hold more of the former. "}],[{"start":264.90000000000003,"text":"The recent relative stability of markets has helped hedge funds that borrow large sums from banks to juice returns, including multi-manager hedge funds like Ken Griffin’s Citadel, Izzy Englander’s Millennium and others. The Vix indicator of volatility — known as the market’s “fear gauge” — fell from around 25 to less than 17 over the month, below its long-term average."}],[{"start":288.00000000000006,"text":"High volatility — such as that seen during US President Donald Trump’s trade war early last year when the Vix soared or after the outbreak of the Iran war this year — can force highly levered players to quickly reduce risk levels, which can hurt performance. "}],[{"start":309.9500000000001,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778134759_9377.mp3"}