By Anirban Sen and Summer Zhen NEW YORK/HONG KONG, April 1 (Reuters) - Global hedge funds last month faced their worst monthly drawdowns since January 2022, Goldman Sachs said in a client note on
Hedge funds hammered by market turbulence triggered by Iran conflict
Market Volatility and Hedge Fund Performance
By Anirban Sen and Summer Zhen
NEW YORK/HONG KONG, April 2 (Reuters) - Global hedge funds last month faced their worst monthly drawdowns in more than four years, according to several top Wall Street prime brokerages, as market volatility triggered by the Iran war battered stocks and weighed on the performance of the world's biggest money managers.
Hedge funds typically aim to deliver outsized returns to justify their fees, but several strategies suffered in the first quarter of the year after a blockbuster 2025. Funds responded to the volatility by pulling back, selling global equities for a fourth straight month and at the fastest pace in 13 years, according to Goldman Sachs research.
The S&P 500 slid 4.63% during the quarter, while the Nasdaq 100 declined 4.87%.
Major Multi-Manager Fund Drawdowns
Large multi-manager funds, including Dmitry Balyasny's flagship multi-strategy fund and Michael Gelband's ExodusPoint, faced big drawdowns during the month and quarter. Balyasny Asset Management was down 4.3% in March, and declined 3.8% during the quarter, according to a person familiar with the matter. ExodusPoint saw declines of 4.5% in March, and was down 2% overall for the quarter.
Citadel's Mixed Results
Citadel, the hedge fund founded by billionaire Ken Griffin, which had $69 billion of assets under management as of March 1, had a mixed quarter. Its Global Fixed Income Fund fell 8.2% in March and is down 5.5% for the year, while its Tactical Trading fund gained 1.8% in March and has risen 5.3% year to date.
The Miami-based firm's flagship Wellington fund was down 1.9% for March, but is still up about 1% for the year; its Equities fund rose 0.7% in March, bringing year-to-date gains to 2.9%.
A Citadel spokesperson declined to comment.
Millennium Management's Performance
New York-based Millennium Management's flagship fund was down 1.2% in March, lowering its year-to-date gains to 1%. A Millennium spokesperson declined to comment.
Industry-Wide Impact and Volatility
"March 2026 stands out as one of the more demanding months for the hedge fund industry in recent years," said Bruno Schneller, managing partner at multi-family office Erlen Capital Management, citing elevated volatility driven by the Iran war that resulted in "rapid shifts" in the currencies, commodities, equity and interest-rate markets.
According to a Goldman Sachs note sent to clients on April 1, the March drawdown - which represents a drop in a fund’s value from its highest to lowest point - was the biggest since January 2022, when investors focused on concerns about an increasingly hawkish Federal Reserve and geopolitical tensions.
Stockpickers Post Negative Returns
Regional Performance
Fundamental long/short stockpickers posted negative returns across all regions, led by Asia-focused funds which were down 7.3%, while European fund managers fell 6.3%, according to the Goldman prime brokerage report seen by Reuters. U.S. funds on average ended March down 4.3%.
For the year through March 31, Asia long/short fund managers are up 6.5%, while Europe and U.S. long/short managers are down 1.8% and 2.4%, respectively, Goldman said.
Sector-Specific Impacts
Technology, media, and telecommunications (TMT) was one of the worst-hit sectors, with long/short funds declining 7.8% in March and 11.8% during the quarter, Goldman said. Healthcare-focused funds were down about 0.9% in March.
In addition, the equally weighted average and median long/short returns for March finished down 3.96% and 4.77%, respectively, which suggests that larger multi-manager funds underperformed during the month.
Systematic Strategies Buck Trend
Systematic Fund Performance
Long/short hedge funds that employ systematic stock trading strategies rose 1.1% in March, driven by so-called alpha returns, or profits that come from a trading edge rather than from broader market gains, Goldman said.
Leverage and Regional Activity
Gross leverage levels stood at more than three times their books, or 312.5, up about 3.9 percentage points month-over-month, which is close to a record.
In North America, the largest percentage of net selling occurred since April 2020, as "short" positions outpaced "long" buys, Goldman said. Short bets generate profits when asset values decline.
Asia Hedge Fund Performance
In Asia, Hong Kong-based Pinpoint Asset Management's multi-strategy fund was down 2.45% in March, while posting a return of 4.02% for the quarter. Singapore's Dymon Asia multi-strategy fund was down 4.3% for the month, and up about 6% for the March quarter.
(Reporting by Anirban Sen in New York, Summer Zhen in Hong Kong; Additional reporting by Utkarsh Shetti in Bengaluru; Editing by Megan Davies, Matthew Lewis and David Gaffen)
