Bronte Capital's flagship fund has declined 9% over the past year, marking a second consecutive annual loss for the high-profile systematic hedge fund.
The underperformance stems largely from investment chief John Hempton's failure to capture the massive rally in computing memory stocks that has defined the artificial intelligence hardware sector this year.
Hempton has warned clients that the current enthusiasm for AI-related equities is unsustainable and destined to reverse.
Hempton has warned clients that the current enthusiasm for AI-related equities is unsustainable and destined to reverse.
This contrarian stance has left the fund on the wrong side of the market's relentless upward trajectory in semiconductor and memory names, exacerbating the drawdown.
The fund's struggles reflect a broader challenge for systematic managers.
Goldman Sachs recently noted that many quantitative funds are reporting their poorest trading results in nearly 12 months, driven by a sharp reversal in AI equities and heightened market volatility.