NEW YORK (Reuters) – Blackstone Group’s BAAM unit, the world’s largest investor in hedge funds, posted a 6.9% return last year, according to a memo seen by Reuters, more than double the 3.1% return of the HFRX Global Hedge Fund Index.
In 2022, Blackstone Alternative Asset Management (BAAM), which oversees $80 billion in assets for pension funds, sovereign wealth funds and other big institutions, returned 4.1%. The return compared to a 16.9% loss in a traditional 60/40 portfolio of stocks and bonds which is often used as a benchmark.
BAAM’s mutual fund, BXMIX, designed to give retail investors access to alternative investment strategies, posted a 7.9% return in 2023, its best since its launch in 2014, the memo said.
A Blackstone representative declined to comment.
The gains trail last year’s S&P 500 24% surge but they outperformed 2022’s 18% dive. Hedge funds often will not beat markets on the way up but will protect capital on the way down.
Joe Dowling, who joined Blackstone from Brown University’s endowment fund in 2021, has overhauled the portfolio by shifting where assets are allocated and improving its risk metrics. Last year he integrated the unit’s direct investment businesses, including Horizon and Special Situations, into a single Multi-Strategy unit, the memo said.
In the three years since Blackstone’s president Jon Gray hired Dowling, BAAM’s absolute return business has produced positive performance in every quarter and outperformed a traditional 60/40 portfolio by almost 12% and the HFRX by more than 17%, the memo said. Gray has called Dowling “prescient” in how he approaches investing.
As Dowling reordered the business to invest more broadly in alternatives instead of primarily allocating capital in a fund of hedge funds, BAAM will soon be rebranded and called Blackstone Multi-Asset Investing (BXMA) to reflect the shift, the memo said.
(Reporting by Svea Herbst-Bayliss; Editing by Emelia Sithole-Matarise)