Trump Rally Propels Hedge Funds to Best Start Since 2013

  • Citadel, Viking, Balyasny, Millennium funds posted gains
  • Equity strategies helped drive the industry’s January increase

Hedge funds posted their best annual start in four years, driven by equities, as President Donald Trump’s plans to stimulate economic growth by reducing taxes and regulation buoyed markets.

The industry gained 1.2 percent last month, according to Hedge Fund Research Inc.’s Fund Weighted Composite Index, the biggest rise for a January since 2013. Andreas Halvorsen’s Viking Global Investors, Ken Griffin’s Citadel, Izzy Englander’s Millennium Management and Dmitry Balyasny’s Balyasny Asset Management all posted gains.

January was the third consecutive monthly increase for hedge funds as a global stock rally propelled by Trump’s victory offered relief to many managers. Last year was a bruising period for the industry. While hedge funds posted a 5.5 percent return in 2016, they saw $70.1 billion in outflows, the most since 2009, amid investor dissatisfaction over high fees and middling performance.

Viking gained 2 percent last month in its hedge fund, rebounding from a 4 percent loss last year, which was the biggest decline since the fund’s inception. The Marshall Wace Global Opportunities fund returned 3.2 percent in January, while billionaire Michael Hintze’s CQS Directional Opportunities Fund, which had surged more than 30 percent last year, gained 0.7 percent, according to investor letters.

Equities Gain

Citadel and Millennium rebounded last month after posting their third-worst and second-worst years, respectively. Citadel gained about 1.9 percent in its main Kensington and Wellington funds in January, a person with knowledge of the firm said. Its Fixed Income fund rose 2.8 percent, while the Global Equities fund returned 0.7 percent and the Tactical Trading fund was up about 1.1 percent.

Millennium returned 1.3 percent in its main fund, a person with knowledge of the returns said. Meanwhile, Balyasny’s Atlas Global fund rose about 1.5 percent in the month boosted by stocks, according to an investor letter, and its Atlas Enhanced fund was up 2.2 percent.

At Jim Simons’ $36 billion quantitative firm Renaissance Technologies, the Institutional Equities Fund fell about 1 percent in January, after ending 2016 up 21.5 percent, according to a person familiar with the matter.

Spokesmen for Citadel, Viking, Millennium, CQS, Marshall Wace and Renaissance declined to comment. Balyasny didn’t immediately respond to a request for comment.

Equity hedge funds posted the biggest increases across all strategies in January, rising 2.1 percent, according to HFR. Multistrategy funds returned about 0.8 percent in the period.

The gains came as total hedge fund assets surpassed $3 trillion for the first time last year, according to HFR. Industry capital increased by $121 billion in 2016, the largest annual jump since 2014.

Even so, some money managers are raising the prospect that the Trump rally may be short-lived. BlackRock Inc. Chief Executive Officer Laurence D. Fink said Wednesday that businesses are already in a “slow down” and the markets “are probably ahead of themselves.”

— With assistance by Nishant Kumar

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE