Hedge Fund Losses: Iran War Ignites Worst Bloodbath Since Trump’s ‘Liberation Day’ Tariffs

By Editorial Team, March 18, 2026

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Global hedge funds are bleeding billions as the escalating Iran conflict unleashes unprecedented market chaos, delivering the industry’s harshest drawdowns since President Donald Trump’s “Liberation Day” tariff bombshell last April.

According to a fresh JPMorgan note, hedge funds have suffered their worst performance since the war erupted on February 28, with crowded trades unwinding at lightning speed. The benchmark MSCI World Index has plunged more than 3% since hostilities began, while the U.S. dollar strengthened 2%. Oil prices skyrocketed amid attacks disrupting Strait of Hormuz shipping, turning traditional diversification into a myth.

The numbers are brutal. The industry has dropped roughly 2.2% in March alone. Long/short equity funds — the worst hit — tumbled 3.4%. Global macro strategies shed 3%, and commodity trading advisers (CTAs) fell a similar amount, their worst stretch in nearly a year despite volatility usually being advantageous.

Big names felt the pain hard. Millennium Management lost an estimated $1.5 billion in one week. Balyasny Asset Management plunged 3.5%, Point72 slipped 1.1%, Coatue dropped 3.8%, and Citadel’s flagship strategy fell around 2%. Equity long-short funds were hammered by overweight bets on Europe and Korea plus underweight positions in software stocks.

JPMorgan strategists, led by Nikolaos Panigirtzoglou, didn’t mince words: “Since the start of the conflict, hedge funds have experienced their worst drawdowns since Liberation Day.”

Crowded wagers against the dollar and in emerging markets reversed violently, while equities proved far more vulnerable than bonds.

HFR President Ken Heinz summed up the mood: “Right now, we’re all oil traders.” AlphaSimplex’s Kathryn Kaminski added that funds’ heavy exposure to growth risk left them exposed when the oil shock threatened both inflation and economic slowdown.

This comes after hedge funds posted their best gains in 16 years in 2025. Now, analysts warn redemptions could surge if the fighting drags on. If shipping lanes reopen quickly, the pain may ease. But prolonged turmoil risks higher energy costs crushing consumers and growth.

Wall Street’s leaders are learning a harsh lesson: in war, even the smartest hedges can burn.