Key Takeaways
- • Marshall Wace, the $80bn hedge fund co-founded by Paul Marshall and Ian Wace, saw its Eureka strategy fall 5.4% in October, trimming year-to-date gains to 5.3%, according to people who had seen the numbers.
- • The data- and model-driven Tops strategy lost 3.6% in October and is up 1.3% for the year.
- • PivotalPath data shows global hedge funds in aggregate lost 3% in October, with equity strategies performing worst as they absorbed the tech sell-off; year-to-date gains remain in the mid-single digits.
- • The Nasdaq 100 entered correction territory after falling 10% from its October 6 record high, with Intel dropping 29% in its worst one-day decline since 1974.
- • Graham Capital's main human-led absolute-return strategy fell 1.8% in October, while its quant macro strategy was down only marginally and is up 21.6% for the year.
Summary
Marshall Wace was among the hedge funds hit hard in October as investor concerns over the sustainability of the AI boom triggered a sharp reversal in Wall Street's tech rally, according to the Financial Times. The $80bn fund, co-founded by billionaires Paul Marshall and Ian Wace, saw its two key strategies decline. The Eureka strategy, managed by a team of portfolio managers, fell 5.4% in October, reducing its year-to-date gain to 5.3%. The data- and model-driven Tops strategy lost 3.6% and remains up 1.3% for the year. Marshall Wace declined to comment.
PivotalPath, a specialist data provider, estimated that global hedge funds in aggregate lost 3% last month, with equity strategies faring worst as they bore the brunt of the tech sell-off. Year-to-date industry gains remain in the mid-single digits. Hedge funds have navigated markets simultaneously whipsawed by the war in Iran, AI bubble fears, rising interest rates and the US midterm elections.
The Nasdaq 100 fell into correction territory the prior week after dropping 10% from its October 6 record high, as a string of lacklustre tech earnings raised doubts about how long it would take for vast AI investments to generate profits. Intel, in which the US government holds a minor stake, was among the biggest losers, falling 29% in its worst one-day drop since 1974. A prime broker described the week as "an ugly week all around" after the Nasdaq fell 3.5% on Friday.
Eurozone bond markets also experienced volatility as oil prices rose and France's political crisis deepened. French and Italian bonds sold off heavily against German Bunds and equivalent-duration euro interest rate swaps, producing large moves in relative value and spread trades popular with hedge funds.
Graham Capital's main human-led absolute-return strategy fell 1.8% in October, taking year-to-date gains to 1.2%, according to people familiar with the performance. Its quant macro strategy dropped only marginally and is up 21.6% for the year.
PivotalPath, a specialist data provider, estimated that global hedge funds in aggregate lost 3% last month, with equity strategies faring worst as they bore the brunt of the tech sell-off. Year-to-date industry gains remain in the mid-single digits. Hedge funds have navigated markets simultaneously whipsawed by the war in Iran, AI bubble fears, rising interest rates and the US midterm elections.
The Nasdaq 100 fell into correction territory the prior week after dropping 10% from its October 6 record high, as a string of lacklustre tech earnings raised doubts about how long it would take for vast AI investments to generate profits. Intel, in which the US government holds a minor stake, was among the biggest losers, falling 29% in its worst one-day drop since 1974. A prime broker described the week as "an ugly week all around" after the Nasdaq fell 3.5% on Friday.
Eurozone bond markets also experienced volatility as oil prices rose and France's political crisis deepened. French and Italian bonds sold off heavily against German Bunds and equivalent-duration euro interest rate swaps, producing large moves in relative value and spread trades popular with hedge funds.
Graham Capital's main human-led absolute-return strategy fell 1.8% in October, taking year-to-date gains to 1.2%, according to people familiar with the performance. Its quant macro strategy dropped only marginally and is up 21.6% for the year.
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