Bridgewater weathers macro hedge fund rout amid Iran war

Thursday 26 March 2026 - 12:40

By: Dakir Madiha

Bridgewater weathers macro hedge fund rout amid Iran war

March proved brutal for major global macro hedge funds as fallout from US-Israeli strikes on Iran rocked world markets. Bridgewater Associates largely sidestepped the damage. Its flagship $92 billion Pure Alpha strategy fell less than 1 percent for the month through last Friday, a person familiar with the fund told Business Insider.

Rivals fared far worse. Caxton Associates' $9 billion Macro fund dropped 15 percent through Friday, totaling $1.3 billion in monthly losses, the Financial Times reported. Brevan Howard's Master Fund declined about 6 percent through March 20, per analyst figures shared on LinkedIn. Taula Capital, backed by Millennium, lost more than 7 percent in the same period.

Losses stemmed mainly from sharp shifts in UK and European interest rate expectations. Before the late February conflict, traders saw over 80 percent odds of a Bank of England rate cut at its March meeting. That plunged below 50 percent within days as soaring energy prices fueled inflation fears, Bloomberg reports. JPMorgan UK economist Allan Monks wrote that March cuts are "off the table" and April needs "clear geopolitical de-escalation."

The European Central Bank held its key rate at 2 percent on March 18. It raised 2026 inflation forecasts to 2.6 percent from 1.9 percent, warning the war will "significantly impact short-term inflation due to higher energy prices." Markets flipped from expecting more cuts to betting on possible hikes later this year.

Many macro funds had bet heavily on continued monetary easing in developed markets. The sudden reversal caught them off guard, especially those focused on short-term sterling and euro rate trades.

Damage spread across the sector. Hedge funds posted their worst drops since the April 2025 "Liberation Day" when President Donald Trump's broad tariffs upended markets, CNBC reported. Equity long/short funds fell about 3.4 percent in March, while global macro strategies dropped around 3 percent, per Hedge Fund Research data cited by CNBC.

Earlier in the month, multi-strategy giants suffered too. Citadel lost nearly $1 billion in fixed-income and macro trading, while Millennium Management and Point72 each shed about $1.5 billion, the Wall Street Journal reported. Bridgewater's relative strength stands out after testing even the biggest, most diversified players. It follows Pure Alpha's record 33 percent gain in 2025, Reuters reports.