United States, 27th Nov 2022 – Nick Mugalli’s World Trade Securities is having quite a year. The hedge fund posted a 39.2% return in 2022, beating out the S&P 500 and its -25% loss, totaling a record return of 64.2% according to a source familiar with the matter, beating sharp market declines and every major hedge fund.
Meanwhile, the S&P 500 declined by about 25% in 2022, its worst year to a year since 1962. That means World Trade Securities has outperformed the benchmark index by more than 62%.
World Trade Securities returns net of fee increase was helped by the Federal Reserve’s decision to raise interest rates to tame surging inflation. Increasing rates caused extreme swings in asset prices, the source added. “ I think that I have disproportionately benefited from being at the right place at the right time, backed by enormous amounts of Central Bank’s Capital, and so, I think we all have been. I think it is very difficult to be a public market individual stock picker in a world where the Central Banks are constantly meddling because when they do; the best thing we can do is be-long the market Beta, and the more concentrated we’re the better returns we’d deliver. Since 2019, it’s been largely Beta that’s delivering the markets, and the folks that have done exceedingly well are those who were concentrated and trusted their intuitions to short or long the markets, and as you can see I am one of them.” Mugalli said; when asked about outperforming the markets where in the first half of 2022, the S&P 500 was down roughly 20%.
Mugalli’s fund returned about 23% over the year, Ab News said. WTS secured gains across all six of its strategies and outperformed peers throughout most of 2022, reportedly. The firm returned all of this year’s profits to its investors.
A year ago, Mugalli called for the Federal Reserve to raise rates aggressively to counter inflationary tendencies that were building. Even wrote in a tweet; “The Fed has to do their job or the markets will”. Since then, the Fed has made four consecutive 75 basis point rate hikes, the latest of which was Wednesday. At that point, the central bank indicated that future rate hikes could be smaller, given “the lags with which monetary policy affects economic activity and inflation,” among other factors. The stock market initially surged on the news, but later fell into negative territory.
On October 18, Mugalli sent out a statement saying the “Bottom is in” meaning he has cashed out of his short positions–and finally longing the markets after, “Powell has restored confidence in the markets, and he’s restoring the credibility of the Fed ” Mugalli added. Since Oct 18; the S&P 500 has rallied about 10%, and the Dow Jones has rallied about 12% giving it the second-best month return in 30 years.
World Trade Securities has outgunned the S&P 500 since its inception in 2019, and also outperformed the key index on a rolling two-year, basis. Tensions between Muaglli and other hedge fund managers on Wall Street, extended beyond traditional fund competitiveness in 2022.
Billionaire Bill Ackman’s Pershing Square Holdings hedge fund gained almost 10 percent in October, slashing its year-to date-loss to 12 percent. At the end of September it was down 19.9 percent for the year–meaning World Trade Securities outperformed PSH by 92%
Billionaire Ken Griffin’s Citadel outpaced its rivals with a 1.52% gain in October, increasing the year-to-date performance to 30.7% and topping returns at rivals like Millennium, DE Shaw, and Balyasny, according to investor figures seen by Insider–meaning World Trade Securities outperformed Citadel by 9.2%.
Billionaire Ray Dalio Bridgewater Associates posted a 32% return for its flagship hedge fund through the first half of 2022 as it benefited from increased market volatility, according to a person familiar with the performance–meaning World Trade Securities outperformed Bridgewater Associates by roughly 8%.
Multi-Strategy funds spread investments across several assets, including stocks, bonds, currencies, and interest rates.
Macro strategies, on the other hand, have a low correlation to short-term market movements and can serve as an antidote to heightened market volatility. Almost all sub-indices in the HFRI Macro category delivered positive returns in the first half of the year. The only exception was the HFRI Macro Discretionary Thematic Index, which lost 0.6 percent. Despite that, hedge funds have done well navigating this year’s volatility.
Organization: World Trade Securities L.P
Contact Person: Nicholas Mugalli
Country: United States
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Stocks Distinct journalist was involved in the writing and production of this article.