The US-Iran conflict triggers market turmoil, with several top hedge funds experiencing losses of hundreds of millions of dollars

The escalation of the US-Iran conflict has caused severe turbulence in the global financial markets, significantly impacting the hedge fund industry known for steady returns. Several top institutions suffered losses worth hundreds of millions of dollars over the past week, greatly eroding their year-to-date gains.

On March 10, according to data from Bloomberg, the world’s largest hedge funds were not spared. Among them, Citadel’s flagship fund Wellington declined 2% last week; Millennium Management lost about $1.5 billion in a single week, narrowing its year-to-date gains to less than 1%; Marshall Wace’s Eureka fund fell the most, by 3.7%; ExodusPoint even gave back all the gains accumulated in the first two months of the year.

The direct trigger for this round of losses was the US and Israel’s military strikes against Iran. This event triggered a sharp increase in market risk aversion, causing a rare simultaneous sell-off across multiple asset classes such as stocks, bonds, and commodities. For multi-strategy funds heavily reliant on cross-asset risk hedging, traditional diversification strategies failed in this shock, exposing their systemic vulnerabilities in extreme macro events.

Leading funds faced pressure in a single week, with many flagship products experiencing significant declines

According to Bloomberg, the most severely affected during this market turmoil are large-scale, influential core institutions, highlighting the intense impact of extreme market conditions on key players.

Specifically, Marshall Wace’s Eureka fund declined 3.7% in a week, making it the weakest among the mentioned funds, with its year-to-date gains shrinking to 2.4%. Balyasny Asset Management fell 3.5%, with only 0.4% gains in the first two months, indicating a significant pullback as well.

Point72 Asset Management, managing $45.7 billion, declined 1.1%, with its year-to-date gains dropping to 3.4%. ExodusPoint faced an even more severe situation, with its accumulated 2.6% gains over the past two months wiped out entirely.

For top-tier institutions that rely on consistent and stable returns as their foundation of trust, such a net value decline within a single week is more than just a paper loss. It not only tests the effectiveness of their current risk management frameworks but also, amid ongoing high market uncertainty, poses a serious challenge to investors’ confidence and patience.

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