Cocoa rally and market tumult hoist systematic hedge funds ahead of their peers

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Those taking the most risk made the most money

Record cocoa prices and markets whipped around by inflation and geopolitics helped hedge funds using systematic strategies outperform their peers in the first quarter, according to industry players and investors.

The U.S. S&P 500 has risen over 11% so far this year, but Hong Kong’s Hang Seng is down about 2%. Japan’s Nikkei has rallied over 20% and European stocks lagged with 6% gains, with China up around 3%. In 2023, crowded positions in the “Magnificent Seven” U.S. tech stocks made most of the money for the wider hedge fund industry, whereas the sharp divergence this year within stocks, bonds and commodities has created the perfect environment for these specific kinds of strategies, said Weinberg.

Long cocoa bets and short positions on grains helped boost $5.4 billion Rotterdam-based investment manager Transtrend to about an 18% return to for the year to March 21.

 

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