The "Trump trade" is expected to drive the entire hedge fund industry to achieve its best performance in at least four years. The tactical trading fund of Citadel, dubbed the new king of hedge funds, has seen its annual return rise to 20% this year, while Rob Citrone's Discovery Capital Management macro hedge fund grew by 14.5% in November, boosting its annual return to 46.5%.
Donald Trump emerged victorious in last month's election in the usa, with the 'Trump trade' driving the entire hedge fund industry to potentially achieve its best performance in at least four years.
According to Bloomberg, the following are the main performances of hedge funds:
"New king of hedge funds" Citadel and Schonfeld Strategic Advisors stand out. Both Citadel's tactical trading fund and Schonfeld's fundamental stock fund saw significant growth in November, boosting their annual returns to 20% and 18.6% respectively, ranking them among the best performing multi-strategy hedge funds this year.Rob Citrone's Discovery Capital Management macro hedge fund grew by 14.5% in November, raising its annual return to 46.5%, making it one of the most successful funds this year.
Rokos Fund also made huge profits. Following Trump's clear victory, billionaire Chris Rokos' hedge fund quickly earned around $1 billion. As of November 22, the fund's year-to-date return has reached 28.5%.
Balyasny Asset Management company saw a turnaround in performance. Balyasny's hedge fund recorded a 3.9% return in November, transforming its previously flat annual performance into a cumulative return of 11.6% for the year. Equally reversing its fortunes is Brevan Howard's Master fund, which had a strong performance in November, successfully reversing its slightly lackluster performance earlier this year, with a cumulative year-to-date return of 9%.
Following Trump's victory, the 'Trump trade' swept through, leading to a rise in US stocks, a stronger US dollar, a surge in bitcoin prices, and a fall in US bonds. Specifically:
Investors expect the Trump administration to continue pushing for tax cuts, deregulation, and trade tariff policies, driving economic growth and corporate profits, thus leading to the rise of US stocks and the US dollar.
The Trump administration strongly supports digital currency, driving the rise of cryptos.
A series of policies that Trump may implement have raised inflation expectations, leading to the decline in US Treasury bond prices.
The sharp fluctuations in major asset classes in November provided macro traders with excellent profit opportunities, further boosting the overall performance of the hedge fund industry:
In November, the Dow Jones Industrial Average accumulated a 7.5% rise, while the S&P 500 Index accumulated a 5.7% rise, both achieving their best monthly performance of the year. The Nasdaq rose more than 6% and the Russell 2000 small cap index rose nearly 11%.
The US dollar rose by 1.72% in November, dropping to 103.37 on November 5th and then generally showing a steady upward trend with some fluctuations.
In November, bitcoin surged by nearly 40%, marking its best single-month gain in nine months.
US bonds experienced a significant drop after Trump's victory, but by the end of November, they had recovered from the decline since the US election. The yield on the US 10-year benchmark Treasury bonds fell by more than 11 basis points in November, while the yield on the 2-year US bonds fell by over 2 basis points in November.
The significant improvement in returns of hedge funds is largely attributed to the successful execution of macro strategies. Funds like Schonfeld and Balyasny have captured trading opportunities across asset categories by grasping market volatility. In addition, their individual stock investment strategies have shown outstanding performance, enhancing their returns.
In fact, prior to Trump's victory, the hedge fund industry had already shown strong overall performance this year. According to data from PivotalPath, the benchmark index tracking 70 multi-strategy hedge funds is expected to achieve the best performance since 2020 in 2024. Trump's victory has provided fund managers with more trading opportunities.
Analysis predicts that with the gradual implementation of Trump's policies in the future, market volatility may continue, bringing more opportunities to the hedge fund industry. This also requires fund managers to maintain efficient risk management and flexible investment strategies in the face of uncertainty.
Editor/ping
