Hedge Funds Hit by Iran Conflict Losses
Top hedge funds experienced their worst drawdown since April as the Iran conflict fueled market volatility, particularly affecting crowded tech trades. Despite this, funds remain overweight in tech, while macro funds saw the strongest gains. The Pimco Commodity Fund, in contrast, slumped 17% in March as oil prices spiked.
The tech-heavy Nasdaq Composite Index declined 1.0% following the intensified conflict, contributing to the hedge fund losses. Funds with significant short positions in energy also faced pressure as Brent crude oil futures jumped above $90 a barrel. Citadel and Millennium Management were among the firms affected by the tech sell-off, though their diversified strategies helped to mitigate the overall impact. Macro funds, which had anticipated geopolitical risks, outperformed due to their positions in safe-haven assets like gold and the US dollar. The slump in the Pimco Commodity Fund contrasts with its strong performance in early 2024, when it benefited from rising energy prices. Analysts attribute the March downturn to profit-taking after the initial surge in oil prices and concerns about demand due to a potential global economic slowdown.
