Hedge fund Alphadyne Asset Management, which manages around $10 billion, has been hit hard this April, with its flagship fund losing about 10% so far, according to Bloomberg. The primary reason behind the losses is the collapse in basis trades—a type of relative value strategy that hedge funds use to profit from small differences between cash bonds and futures or swaps. The firm also faced losses from wrong bets on Japanese assets.
Basis trading, often considered low-risk when stable, turned into a trap this month due to market chaos caused by Trump’s aggressive trade tariffs. Alphadyne had already fallen 2.4% in the first week of April, and the recent blow has dragged its year-to-date losses to around 8%, despite being marketed as a “hedged” strategy.
The fallout is part of a broader meltdown across hedge funds relying on fixed-income relative value strategies. Basis trades, especially when leveraged, were slammed as long-term bond yields surged. The sudden spike in yields destabilized these trades, which depend on stable rate environments.
Other hedge funds are also struggling—Tudor’s Alexander Phillips reportedly lost $140 million this month, erasing all 2025 gains, and Eisler Capital’s were forced to stop trading after steep losses. With basis trades unraveling across the board, the bond market volatility has exposed the fragility of some of Wall Street’s most complex and leveraged strategies.
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