Hedge funds cut index-rebalance PMs amid a strategy slump

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Hedge funds cut index-rebalance PMs amid a strategy slump
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'It can't get much worse than this': A trail of portfolio managers have resigned or been liquidated as the once lush index-rebalance strategy dries up

"It's just pod after pod after pod," one headhunter involved in the space said."These multi-strats, especially the bigger ones, they lose patience."

"The strategy had a phenomenal few years," one PM said, noting the recent decline in performance that has carried into 2023. connected to the Russell 3000's annual reconstitution. A number of PMs and teams hit drawdown limits and were liquidated in the aftermath. Unwinding these books, which can have billions in notional exposure, has knock-on effects, adding another wrinkle for teams trying to predict an index's trajectory.

"It's such an X factor you have no control over," the headhunter said."That also makes it harder to trade the strategy."

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