Key Takeaways
- • Global hedge funds posted their worst monthly drawdowns in over four years during March 2026, with Iran conflict-driven market volatility triggering forced de-risking and equity liquidation at the fastest pace in 13 years, according to Goldman Sachs data.
- • Asia-focused long/short funds declined 7.3%, European funds fell 6.3%, and US funds dropped 4.3%, while systematic trading strategies bucked the trend with gains amid elevated leverage levels.
- • Citadel's $69 billion AUM fund posted divergent results: its Global Fixed Income Fund tumbled 8.2% in March (down 5.5% year-to-date), while its Tactical Trading fund gained 1.8% in March and rose 5.3% year-to-date.
- • Prominent multi-strategy managers including Dmitry Balyasny's Balyasny Asset Management (down 4.3% in March, -3.8% Q1) and Michael Gelband's ExodusPoint (down 4.5% in March, -2% Q1) faced significant quarterly drawdowns after a strong 2025.
- • Broad equity selloffs accelerated across global markets, with the S&P 500 declining 4.63% in Q1 2026 and the Nasdaq-100 falling 4.87%, reversing momentum from the previous year.
Summary
Global hedge funds experienced their most severe monthly drawdowns in more than four years during March 2026, as geopolitical tensions stemming from Iran conflict triggered widespread market volatility and forced institutional deleveraging. According to prime brokerages and Goldman Sachs equity research, the March decline marked a sharp reversal from a blockbuster 2025, with hedge funds engaged in panic selling of global equities for a fourth consecutive month at rates not seen in 13 years.
Performance deterioration varied significantly by strategy and geography. Asia-focused long/short hedge funds led declines with a 7.3% drop, followed by European funds down 6.3% and US-focused strategies down 4.3%. Notably, systematic trading funds posted gains during the turbulent period, capitalizing on volatility spikes while directional managers faced headwinds. The outperformance divergence highlights how strategy-specific risk management proved critical amid forced de-risking and record leverage levels across the industry.
Large multi-strategy managers bore outsized losses. Balyasny Asset Management, Dmitry Balyasny's flagship vehicle, fell 4.3% in March and declined 3.8% for the first quarter. Michael Gelband's ExodusPoint suffered 4.5% losses in March and was down 2% for the quarter overall. Citadel, Ken Griffin's $69 billion AUM fund, delivered mixed results: its Global Fixed Income Fund plummeted 8.2% in March and is down 5.5% year-to-date, while its Tactical Trading fund gained 1.8% in March with year-to-date gains of 5.3%, underscoring the stark performance divergence between fixed income and systematic trading strategies.
Underlying equity markets faced persistent weakness throughout the quarter. The S&P 500 declined 4.63% and the Nasdaq-100 fell 4.87% during Q1 2026, with daily volatility linked to Iran conflict developments pressuring both long equity positions and leveraged portfolios. Goldman Sachs data confirmed that hedge funds executed their largest synchronized equity sales in over a decade, signaling capitulation across the institutional money management community and potentially setting the stage for volatility compression if geopolitical tensions ease.
Performance deterioration varied significantly by strategy and geography. Asia-focused long/short hedge funds led declines with a 7.3% drop, followed by European funds down 6.3% and US-focused strategies down 4.3%. Notably, systematic trading funds posted gains during the turbulent period, capitalizing on volatility spikes while directional managers faced headwinds. The outperformance divergence highlights how strategy-specific risk management proved critical amid forced de-risking and record leverage levels across the industry.
Large multi-strategy managers bore outsized losses. Balyasny Asset Management, Dmitry Balyasny's flagship vehicle, fell 4.3% in March and declined 3.8% for the first quarter. Michael Gelband's ExodusPoint suffered 4.5% losses in March and was down 2% for the quarter overall. Citadel, Ken Griffin's $69 billion AUM fund, delivered mixed results: its Global Fixed Income Fund plummeted 8.2% in March and is down 5.5% year-to-date, while its Tactical Trading fund gained 1.8% in March with year-to-date gains of 5.3%, underscoring the stark performance divergence between fixed income and systematic trading strategies.
Underlying equity markets faced persistent weakness throughout the quarter. The S&P 500 declined 4.63% and the Nasdaq-100 fell 4.87% during Q1 2026, with daily volatility linked to Iran conflict developments pressuring both long equity positions and leveraged portfolios. Goldman Sachs data confirmed that hedge funds executed their largest synchronized equity sales in over a decade, signaling capitulation across the institutional money management community and potentially setting the stage for volatility compression if geopolitical tensions ease.
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