Key Takeaways
- • Global hedge funds experienced their worst monthly drawdowns in over four years during March 2026, driven by Iran war-related market volatility that hammered equities across major indices.
- • Major multi-strategy funds suffered material losses: Balyasny Asset Management declined 4.3% in March (down 3.8% for Q1), while ExodusPoint fell 4.5% in March (down 2% for the quarter), signaling broad underperformance across the sector.
- • Citadel's $69 billion flagship portfolio delivered mixed results—its Global Fixed Income Fund plummeted 8.2% in March and is down 5.5% year-to-date, though its Tactical Trading fund gained 1.8% in March with 5.3% year-to-date gains.
- • Hedge fund managers liquidated global equities at the fastest pace in 13 years across four consecutive months, reflecting defensive positioning as the S&P 500 fell 4.63% and the Nasdaq 100 declined 4.87% during the quarter.
- • Millennium Management's flagship fund declined 1.2% in March, reducing year-to-date gains to 1%, indicating that even established large-cap strategies faced headwinds despite a strong 2025.
Summary
Global hedge funds faced a severe reckoning in March 2026, posting their worst monthly drawdowns in more than four years as geopolitical tensions surrounding the Iran conflict triggered widespread market volatility. The selloff proved particularly punishing for a sector that had delivered outsized returns in 2025 and whose strategies are predicated on generating alpha returns that justify their fee structures.
Major benchmarks deteriorated sharply during the quarter. The S&P 500 declined 4.63% while the Nasdaq 100 fell 4.87%, setting a volatile backdrop for hedge fund managers. In response to mounting uncertainty, funds engaged in a sustained equity liquidation cycle. Goldman Sachs research documented that hedge funds sold global equities for a fourth consecutive month at the fastest pace in 13 years, signaling coordinated risk reduction across the industry.
The performance impact was acute for several tier-one managers. Dmitry Balyasny's flagship multi-strategy fund, Balyasny Asset Management, declined 4.3% in March and 3.8% for the full quarter. Michael Gelband's ExodusPoint saw similar deterioration with a 4.5% monthly loss, reducing quarterly performance to a 2% decline. Citadel, which held $69 billion in assets under management as of March 1, delivered notably divergent results across its portfolio of funds. Its Global Fixed Income Fund suffered the largest drawdown at 8.2% for March and sits down 5.5% year-to-date, while its Tactical Trading fund bucked the trend with a 1.8% gain in March and 5.3% year-to-date returns. The flagship Wellington fund declined 1.9% in March but maintained a modest 1% year-to-date gain, while the Equities fund posted a 0.7% monthly gain for 2.9% year-to-date performance.
Millennium Management's flagship fund declined 1.2% in March, bringing its year-to-date performance to just 1% despite early 2025 strength. The widespread underperformance underscores how geopolitical shocks and sustained volatility can undermine even sophisticated hedge fund strategies, forcing a tactical retreat from the aggressive positioning that had characterized the previous year's market environment.
Major benchmarks deteriorated sharply during the quarter. The S&P 500 declined 4.63% while the Nasdaq 100 fell 4.87%, setting a volatile backdrop for hedge fund managers. In response to mounting uncertainty, funds engaged in a sustained equity liquidation cycle. Goldman Sachs research documented that hedge funds sold global equities for a fourth consecutive month at the fastest pace in 13 years, signaling coordinated risk reduction across the industry.
The performance impact was acute for several tier-one managers. Dmitry Balyasny's flagship multi-strategy fund, Balyasny Asset Management, declined 4.3% in March and 3.8% for the full quarter. Michael Gelband's ExodusPoint saw similar deterioration with a 4.5% monthly loss, reducing quarterly performance to a 2% decline. Citadel, which held $69 billion in assets under management as of March 1, delivered notably divergent results across its portfolio of funds. Its Global Fixed Income Fund suffered the largest drawdown at 8.2% for March and sits down 5.5% year-to-date, while its Tactical Trading fund bucked the trend with a 1.8% gain in March and 5.3% year-to-date returns. The flagship Wellington fund declined 1.9% in March but maintained a modest 1% year-to-date gain, while the Equities fund posted a 0.7% monthly gain for 2.9% year-to-date performance.
Millennium Management's flagship fund declined 1.2% in March, bringing its year-to-date performance to just 1% despite early 2025 strength. The widespread underperformance underscores how geopolitical shocks and sustained volatility can undermine even sophisticated hedge fund strategies, forcing a tactical retreat from the aggressive positioning that had characterized the previous year's market environment.
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