Business & Investment

Omicron-fueled volatility trading provides hedge funds with the worst monthly returns since March 2020

© Reuters. The trader is working on the floor of the New York Stock Exchange (NYSE) in New York City, USA on December 2, 2021. REUTERS / Brendan McDermid

Maya Keidan

Toronto (Reuters)-November seems to have been the worst month for global hedge fund performance due to fluctuations in the Omicron fuel market since the virus first closed its economy at the start of the COVID-19 pandemic. ..

Hedge funds fell by an estimated 1.6% to 2% in November, with the worst monthly performance since March 2020, according to early data from industry research firm Pivotal Path.

The potential loss is a setback of what has been a stable year of performance so far. According to data from HedgeFund Research (HFR), the average hedge fund for the first 10 months of 2021 has increased by 11.4%. This is compared to last year’s 11.8% and 2019’s 10.5%.

Losses are “quite widespread,” said Robert Sears, chief investment officer of London-based Capital Generation Partners, which invests in hedge funds. Will go down. ”

Omicron’s concerns hit stocks on the last day of the month, dropping 3.9% from a record high in November, recording a loss of almost 1% across the month. However, some areas of the market were hit harder, with S & P’s energy sector losing 6.2% last month and finance losing 5.9%.

In November, the Federal Reserve’s monetary policy boosted volatility across asset classes as fixed income, currency markets and equities fluctuated.

The market has hampered some equity-focused funds, which have suffered bearish bet losses on unexpectedly rebounded equities.

Jean Baptiste Berthon, senior strategist at Paris-based Lyxor Asset Management, which invests in hedge funds, said Western long-short strategies fell by about 1.5% to 2% between November 25 and December 1. Said.

Share Modana (NASDAQ :) For example, when Sears said some hedge funds had bet, it surged 30% between November 18th and November 30th. Float, according to data from S3 partners.

Meanwhile, computer-driven trend-following hedge funds suffered a “significant” performance decline of 4% to 5% between November 25th and December 1st, losing bonds, commodities and equities. A “perfect storm” has occurred. Belton said.

So-called “macro” hedge funds betting on macroeconomic trends fell by nearly 2%, primarily from fixed income positioning, but merger arbitrage funds requiring trading increased slightly, he added.

Barson said some hedge funds are likely to pull back risk this month in order to maintain returns, although they were often strong years.

“It’s three weeks before the end of the year, so you won’t see the money becoming a hero and trying to revive major play to get a rebound,” he said.

Omicron-fueled volatility trading provides hedge funds with the worst monthly returns since March 2020

https://www.investing.com/news/stock-market-news/omicronfuelled-volatility-deals-hedge-funds-worst-monthly-return-since-march-2020-2699337 Omicron-fueled volatility trading provides hedge funds with the worst monthly returns since March 2020

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