Market erupts over US-Iran conflict, several top hedge funds suffer hundreds of millions in losses

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The escalation of the US-Iran conflict has caused violent turbulence in the global financial markets, bringing significant shocks to the hedge fund industry, which is renowned for stable returns. Several top institutions endured hundreds of millions of dollars in losses over the past week, severely eroding their year-to-date gains.

On March 10, according to data obtained by Bloomberg, none of the world’s largest hedge funds managed to escape unscathed. Among them, Citadel’s flagship fund Wellington fell 2% last week; Millennium Management lost around $1.5 billion in a single week, narrowing its year-to-date gains to less than 1%; Marshall Wace’s Eureka fund suffered the deepest drop, down 3.7%; ExodusPoint even gave back all profits accumulated in the first two months of the year.

The immediate trigger for these losses was the US and Israel’s military strikes against Iran. This event sharply increased market risk aversion, with rare simultaneous sell-offs across diverse asset classes, including equities, bonds, and commodities. For multi-strategy funds that rely heavily on cross-asset risk hedging, traditional risk-diversifying allocation logic failed amid this shock, exposing their systemic fragility in the face of extreme macro events.

Top Funds Under Pressure, Several Flagship Products Among Biggest Decliners

According to Bloomberg, the institutions hit hardest during this market turmoil were all large-scale, industry-leading entities, highlighting the severity of extreme events’ impact on core-tier organizations.

Looking at specific performances, Marshall Wace’s Eureka fund topped the list of losers, falling 3.7% in a week, making it the weakest among the mentioned funds, with its cumulative year-to-date gain narrowing to 2.4%. Balyasny Asset Management dropped 3.5%, and its growth in the first two months was only 0.4%, marking a significant retracement.

Point72 Asset Management, which manages $45.7 billion, dropped 1.1%, reducing its year-to-date gain to 3.4%. ExodusPoint’s situation is even more severe, as its accumulated 2.6% gain in the previous two months was wiped out entirely.

For leading institutions whose foundation is founded on steady, stable returns, a net asset value retracement of such magnitude in a single week is far more than a mere book loss. It not only stress-tests the efficacy of their current risk management frameworks, but also—amid continued high market uncertainty—poses a tough challenge to the confidence and patience of investors.

Risk warning and disclaimerThe market involves risk, and investments must be made with caution. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial situations or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Investments based on this are at your own risk. ```