Key Takeaways
- • Balyasny Asset Management fell 3.4% in October, leaving it down 2.7% year-to-date, while ExodusPoint lost 2.4% and cut its YTD gain to 1.6%.
- • Millennium Management fell 2.3% in October, bringing its annual return to 5.7%, and is withdrawing more than $1.5bn from external managers Troluce Capital Advisors and Axebrook Capital.
- • Walleye Capital posted its worst monthly performance since March 2020 and is returning part of investors' capital, while Value Aligned Research Advisors plunged 33%.
- • The Nasdaq 100 fell 6.4% in early November, its sharpest decline since March 2020, as the AI-related selloff deepened and raised correlation concerns across hedge fund strategies.
- • Citadel's Wellington fund gained 1.7% in October and Quantedge returned 7.2% for the month, showing wide dispersion among managers.
Summary
Hedge funds suffered widespread losses in October as crowded technology positions, geopolitical shocks and credit market volatility triggered simultaneous drawdowns across strategies, according to a Bloomberg report. The episode has raised concerns about leverage and the effectiveness of portfolio diversification.
Among major multistrategy managers, Balyasny Asset Management declined 3.4% during the month, leaving it down 2.7% for the year. ExodusPoint Capital Management lost 2.4%, reducing its year-to-date gain to 1.6%. Millennium Management fell 2.3%, bringing its annual return to 5.7%, and is withdrawing more than $1.5bn from external managers Troluce Capital Advisors and Axebrook Capital following losses at both firms.
Specialist managers were also hit. Walleye Capital is returning part of its investors' capital after recording its worst monthly performance since March 2020. Greg Coffey's Kirkoswald Asset Management suffered its largest monthly loss on record. Credit hedge fund Arini Capital Management declined more than 12%, while AI-focused Value Aligned Research Advisors plunged 33%. Equity-focused managers fared similarly, with D1 Capital Partners' stock portfolio falling 4.4% and Whale Rock Capital Management's flagship fund declining approximately 8%. The losses reflected a broader retreat from AI-related investments, compounded by political turmoil in Brazil and France and renewed concerns over credit market risks.
Several major managers delivered positive returns. Citadel's Wellington fund gained 1.7% in October, lifting its year-to-date return to 15.3%, while DE Shaw's Composite fund advanced 0.7%, bringing its annual gain to 16%. Quantedge was a standout, returning 7.2% during the month and 60% for the year.
Market turmoil intensified in early November. The Nasdaq 100 fell 6.4% on Thursday, its sharpest decline since March 2020, and the S&P 500 dropped 4.4%. The reversal followed a brief post-election rally as investors reassessed the outlook for AI investment and potential regulatory intervention.
The breadth of the losses has heightened concerns over correlations between supposedly diversified hedge fund strategies, particularly among multimanagers employing leveraged trading teams. Market participants warn that further risk reductions and forced liquidations could spread selling pressure beyond crowded technology positions into otherwise fundamentally sound investments.
Among major multistrategy managers, Balyasny Asset Management declined 3.4% during the month, leaving it down 2.7% for the year. ExodusPoint Capital Management lost 2.4%, reducing its year-to-date gain to 1.6%. Millennium Management fell 2.3%, bringing its annual return to 5.7%, and is withdrawing more than $1.5bn from external managers Troluce Capital Advisors and Axebrook Capital following losses at both firms.
Specialist managers were also hit. Walleye Capital is returning part of its investors' capital after recording its worst monthly performance since March 2020. Greg Coffey's Kirkoswald Asset Management suffered its largest monthly loss on record. Credit hedge fund Arini Capital Management declined more than 12%, while AI-focused Value Aligned Research Advisors plunged 33%. Equity-focused managers fared similarly, with D1 Capital Partners' stock portfolio falling 4.4% and Whale Rock Capital Management's flagship fund declining approximately 8%. The losses reflected a broader retreat from AI-related investments, compounded by political turmoil in Brazil and France and renewed concerns over credit market risks.
Several major managers delivered positive returns. Citadel's Wellington fund gained 1.7% in October, lifting its year-to-date return to 15.3%, while DE Shaw's Composite fund advanced 0.7%, bringing its annual gain to 16%. Quantedge was a standout, returning 7.2% during the month and 60% for the year.
Market turmoil intensified in early November. The Nasdaq 100 fell 6.4% on Thursday, its sharpest decline since March 2020, and the S&P 500 dropped 4.4%. The reversal followed a brief post-election rally as investors reassessed the outlook for AI investment and potential regulatory intervention.
The breadth of the losses has heightened concerns over correlations between supposedly diversified hedge fund strategies, particularly among multimanagers employing leveraged trading teams. Market participants warn that further risk reductions and forced liquidations could spread selling pressure beyond crowded technology positions into otherwise fundamentally sound investments.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.