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Coronavirus Market Devastation Reveals Hedge Fund Strategy Successes and Failures

2 mins
7 April 2020, 06:10 GMT+0000
Updated by Kyle Baird
7 April 2020, 06:10 GMT+0000
In Brief
  • PointState Hedge Fund has lost $2.1 billion so far this year.
  • Brevin Howard's flagship fund sees its best month ever in March.
  • Investment strategies are being tried and tested by the chaotic market.
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The past month has seen radical changes in nearly every financial sector. Bonds, commodities, stocks, and Bitcoin have all experienced dramatic swings in value during the Coronavirus-induced crisis.
This is also true of hedge funds, as the market has tested the mettle of various management investment strategies. While some have seen dramatic losses due to the virus, others have managed excellent returns.

Coronavirus Crushes Major Hedge Funds

One notable point of failure is the PointState Hedge Fund, managed by Zach Schreiber. To date this year, the fund has already lost 9.5%, leaving investors desiring to redeem funds. In fact, the company has already seen $2.1 billion requested this year and has forecast another $640 million to come. This represents more than half of its $5 billion in managed assets. The withdrawals have been so dramatic and rapid that the company has been unable to meet the requests. A March newsletter to investors explained: “The substantial majority of each investors’ redemption is expected to be distributed in cash in early April. Given the volatility in global markets, we cannot, at this time, provide the exact percentage of each investors’ redemption that will be satisfied in cash.” Value Down Red

Brevin Howard Soars

Other funds, however, have experienced dramatically different first quarters. For example, Brevin Howard’s macro hedge fund, managed by Alfredo Saitta, Fash Golchin and Minal Bathwal, has seen record returns in March. Investors enjoyed a stunning 17.01% rise in March, bringing the total return to 21.6% for the year. The month’s returns nearly doubled the firm’s previous high in January of 2008 when it saw 9.89% gains. The firm’s focus on developed markets, along with other similar funds, has kept assets in fixed income positions. Additionally, the firm had bet on rising dollar and gold values and had shorted stocks affected by the COVID-19 market collapse. The fund’s founder, Alan Howard, made news last year by announcing a $1 billion hedge fund focused on cryptocurrencies. That fund, with Howard’s UK-based firm Elwood Asset Management, made waves in the cryptocurrency community by focusing on institutional investors.


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