"Most years, the whole of multistrategy hedge funds is greater than the sum of their parts. Thanks to a web of uncorrelated trading teams, leverage, and tight risk management, these firms can generate strong returns in times of distress - as demonstrated by the 2022 performance of firms like Ken Griffin's Citadel - while also making money when markets are steady."
"At Griffin's $69 billion Citadel, the firm's tactical trading fund - which taps the firm's fundamental equities and quant units - is up 10.4% through September, a person close to the Miami-based manager said. That figure is more than double the 5% its flagship Wellington fund has generated this year. Steve Cohen's Turion fund, which started trading roughly 12 months ago with $1 billion and focuses on AI stocks, is up more than 18% through September, a person close to the manager said."
Multistrategy hedge funds usually benefit from diversified, uncorrelated teams, leverage, and strict risk controls to generate returns in both distressed and steady markets. This year’s unsteady global economy and large tech capital expenditures on AI created choppy conditions that warped markets and weighed on flagship multistrategy funds. Narrower mandates and concentrated strategies produced stronger performance across several firms. Citadel’s tactical trading fund rose 10.4% versus its Wellington flagship’s 5%. Steve Cohen’s AI-focused Turion gained over 18%. Schonfeld’s fundamental equities strategy outpaced its flagship, and LMR’s convertibles and capital-structure arbitrage fund delivered especially strong returns.
#multistrategy-hedge-funds #concentrated-strategies #performance-divergence #ai-driven-tech-investment
Read at Business Insider
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