Hedge fund clients profited most by investing in macro and multi-strategy hedge funds last year — and many of them are betting the same strategies will be winners again in 2023.
(Bloomberg) — Hedge fund clients profited most by investing in macro and multi-strategy hedge funds last year — and many of them are betting the same strategies will be winners again in 2023.
Some are also seeking out stock funds, which is a bit surprising given that some of the biggest equity funds are coming off a year of record losses.
“We are redirecting a portion of our portfolio toward equity-market-neutral and Asian-equity strategies that have underperformed in the previous year,” said Sébastien Sirois, chief investment officer at Blue Lotus Management.
Sirois is taking money from macro managers, saying he believes higher inflation — the trend that benefited many of these traders last year — is now reflected in asset prices. Other investors, though, said they’re maintaining their macro wagers because they expect continued market volatility will create opportunities in everything from currencies to commodities.
Jon Caplis, head of hedge fund research firm PivotalPath, said managers and investors he’s spoken with are most enthusiastic about credit, global macro and some stock-pickers.
While some clients told him they expect technology-focused funds — last year’s worst performers — to continue to struggle, they’re more optimistic about other equity funds, including those focused on biotech and health care.
Andreas Halvorsen’s Viking Global Investors outperformed rivals last year thanks to bets on health-care stocks, which comprised about a third of its portfolio at the end of September. Its hedge fund ended the year down 2.4%, compared with a drop of 19% for the S&P 500. The fund also made money by shorting stocks and avoiding private equity.
Those venture investments, after boosting returns in previous years, dragged down hedge fund performance last year. Dan Sundheim’s D1 Capital Partners, for example, marked down its private portfolio by 27% last year, while its public investments fell 35%.
All of the firms declined to comment.
Read more: Stock Hedge Funds Vaporize Billions With Another Year of Losses
(Updates chart with additional returns.)
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