In 2023, the performance of many hedge funds left investors surprised as they grappled with a surge in bond yields that outpaced stock market indexes.
However, a select few managed to achieve remarkable double-digit gains, with technology-focused funds leading the charge.
SoMa Equity Partners, a tech-centric fund, emerged as one of the top performers, boasting a staggering 62% return, surpassing both the S&P 500 and the Nasdaq Composite indexes.
Their success was attributed to strategic investments in tech giants like Meta Platforms Inc, Microsoft, and Uber Technologies, alongside short positions against luxury and travel companies.
Coatue Management, founded by Philippe Laffont, a protege of hedge fund legend Julian Robertson, delivered an impressive 21.5% return, according to anonymous sources.
Anson Funds’ Investments Master fund also excelled in the long/short equity strategy, achieving an 18.2% gain, partly driven by a successful bet on British homebuilder Vistry Group.
Among the larger multi-strategy firms, Millennium Management and Citadel’s Wellington Fund stood out with returns of 10% and 15.3%, respectively, outpacing the bond markets. However, these firms declined to comment on their performance.
Not all multi-strategy firms fared as well, with Schonfeld Strategic Advisors’ Fundamental Equity fund and flagship fund, Strategic Partners, achieving modest gains of 5% and 3%, respectively.
In contrast, hedge funds, on average, delivered a 5.7% return through November 2023, with equities and credit-focused strategies performing the best, while macro and managed futures lagged behind.
This paled in comparison to the S&P 500, which soared over 20% during the same period.
Hedge funds also faced competition from the bond market, which experienced a late-2023 rally, as Bloomberg’s U.S. Aggregate Bond Index rose by 4.88%.
Marshall Wace, a prominent hedge fund managing $62.3 billion, achieved notable returns of 7.69% in its Market Neutral Tops fund and 7.58% in its Global Opportunities fund. The firm’s Eureka fund returned 4.62%.
Results for managed futures and hedge funds employing systematic and active strategies based on macroeconomic events were mixed. Eisler Capital, a $4 billion multi-strategy fund, posted a positive 9.8% return, while Winton Capital, overseeing $10.3 billion, navigated a 5.60% positive result in its multi-strategy program and a 10.1% rise in its Diversified Macro fund.
Mulvaney Capital Management posted an impressive 51.22% return, while Metori Capital Management in Paris saw a negative 2.8% return (after fees) in its Amundi Metori Epsilon Global Trends fund, surpassing peers in the Societe Generale Trend Index which finished down 4%.
Despite the diverse performance of hedge funds in 2023, many chose to remain tight-lipped about their strategies and outlook for the future.