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Hedge Funds Score Big Gains on Dividend Bets That Hurt Banks

  • Dividend futures in Europe, U.S., Japan plunged in March
  • Ovata, Oasis, York Capital correctly bet the rout was overdone
A French national flag is reflected on a plaque at the BNP Paribas SA headquarters in Paris.
Photographer: Nathan Laine/Bloomberg
Updated on

One of the largest financial market dislocations of the Covid-19 era has generated big gains for hedge funds that bet the turmoil would prove short-lived.

The winning trades involved dividend futures, which derive their value from shareholder payouts by companies in benchmark stock indexes. Historically among the most stable of equity-linked investments, the securities have swung even more wildly than share prices over the past three months.