SaltWire's Atlantic regional weather forecast for October 6, 2023 | SaltWireLONDON - A fresh rout in government bonds has sparked alarm across world markets, battering equities. Yet in one corner of the hedge fund world, there's a sigh of relief.
A Societe Generale index tracking the average performance of 20 of these funds posted a positive 2.3% performance average for this year up to Oct. 4, up from negative 4% in March of this year. AlphaSimplex is a $7.9 billion trend following hedge fund. These funds use computer algorithms to find where markets might move and initiate trades which jump on for the ride, up or down.
Six trend and systematic funds told Reuters they were short government bonds and particularly, U.S. Treasuries.Holding onto bets that bond prices will fall, and their yields rise, has caused much pain for this group of funds trading systematically that BarclayHedge says accounts for $352 billion of the roughly $5 billion hedge fund sector.
Last year, AQR Capital Management more than doubled the markets traded in its classic trend strategy to include harder-to-access alternative markets, said Yao Hua Ooi, principal and co-head of macro strategies at the $100 billion hedge fund.