Marshall Wace, one of the world’s largest hedge fund firms, is sharing profits of more than £720m among its partners after its computerized trading systems posted strong gains at a turbulent time for global financial markets.
The London-based company, founded in 1997 by Sir Paul Marshall and Ian Wace, reported around £60bn for its year-to-February results.
The news comes after Sir Christopher Hohn, the billionaire founder of hedge fund firm TCI Fund Management, paid a $690 billion dividend to a company he personally controls in the same period, up from $152 million a year earlier .
The record payouts come during a very mixed period for the $3.8k hedge fund industry.
While some managers have benefited well from betting on a huge sell-off in Treasuries or the start of a bear market in equities, many traders were caught off guard when the high-growth tech bets they favored during the seemingly never-ending bull market were caught sharply by steep falls affected by inflation and interest rate increases.
Chase Coleman’s Tiger Global, once one of the world’s best-performing hedge funds, was down more than 50 percent through October this year. In contrast, Crispin Odey is up around 150 percent in his European fund Odey, helped by betting against bonds, while Haidar Capital is up more than 250 percent.
Equity hedge funds are down an average of 11.3 percent this year through the end of October, according to data group HFR, while hedge funds are down an average of 4.5 percent.
Marshall Wace’s computer-controlled funds made strong gains as some quantitative managers were able to take advantage by buying stocks they thought were oversold during the bear market.
Its Tops Market Neutral fund, which analyzes buy and sell recommendations from about 1,000 outside analysts, is up 23.7 percent last year and is up more than 17 percent this year, according to figures sent to investors and were viewed by the Financial Times.
The company’s flagship $17 billion Eureka fund, managed by Marshall, is up 10.8 percent last year and is up 4.4 percent this year.
The company’s profits were split among 23 partners, including Marshall and Wace, and parent company Marshall Wace Asset Management.
Hohn’s TCI, on the other hand, which bets on rising stock prices rather than falling and has benefited from the strong bull run during the coronavirus pandemic, saw earnings rise 160 percent to $714 million, boosted by performance fees.
Most of the dividends paid to Hohn’s company were subsequently invested in TCI’s hedge fund.
The fund is down about 12 percent so far this year, according to one investor.
Marshall Wace and TCI declined to comment.
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