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HK Consensus 2026 – Liquid Fund Upshot: Tactical Funds Outperform in a Difficult Market
(these are my personal observations. fund identities anonymized given the sensitivity of institutional P&L.)
Market Regime: LOs Struggling
The current market is ~80% flows driven/ 20% narrative/fundamentals – making it very difficult for traditional fundamental, low‑turnover strategies to generate alpha.
“Hot money” rotates rapidly through narratives, while classic long‑only (LO) mandates with 6–12+ month holding periods are structurally disadvantaged, repeatedly arriving late to crowded trades and wearing the full right‑tail/left‑tail volatility. Several 9-fig USD LOs down ~70% peak‑to‑trough on a mark‑to‑market basis while they are simultaneously out in market trying to raise new capital.
Tactical Liquid Funds: Outperform
A small cohort of tactical (L/S), trading‑oriented liquid funds materially outperformed in 2025 by positioning into dislocations and aggressively monetising downside:
Notable outperformers (coded):
• "T" - NYC -based ~9-fig liquid fund: delivered ~+75% gross in 2025, with the bulk of the P&L in Oct–Nov. Short BTC around 120k and ETH around 4k, printing ~+15% on 10 Oct alone, then compounded a further +43% in Nov-25 by pressing shorts into the unwind. On the equity side, generated outsized returns shorting listed crypto equities (e.g., Bitmine, Galaxy and other DAT names) into the de‑risking.
•“P” – NYC‑based ~9-fig multi‑strategy fund:
Strong market‑neutral and discretionary strat.
•“N” – niche prop fund: Had a “comeback arc” after a sizeable 2024 drawdown, rebuilding NAV through tighter risk and higher‑conviction tactical positioning.
•“F” – NYC‑based ~9-fig fund: Playbook is high‑conviction spot token exposure with short duration and fast narrative rotation, plus growing activity in crypto equities.
Long‑Only (LO) Funds: Overall Big Drawdowns
• Many 9 to 10 fig USD LO managers are sitting on –30% to –75% drawdowns for 2025–early 2026. Given BTC down ~40% from local highs.
• The altcoin overhang is severe: in one notable case, a liquid fund was >USD 100m up mark‑to‑market on Plasma (XPL) at the peak, but XPL subsequently traded down ~95% - essentially giving back all PnL
• Very few LO books are positive on a net, realised basis; one standout macro‑tilted LO fund is reportedly +90% for 2025, having de‑risked aggressively in late September 2025 (substantially to cash / hedged) and then maintained a flat to net‑short profile through 4Q25–1Q26.
Liquid Fund Allocators – Observations
• HK family offices: Allocation is heavily relationship‑based: “Is this manager a friend / trusted referral? ” Generally, seem to matter more than a quantitative screen.
There is very little appetite to back managers with <12 months of track record, even if early returns are strong; most HK FOs simply won’t move without a full‑year print.
• BTC‑whale capital: Several multi‑billion‑USD AUM family offices have paused new allocations to liquid funds since BTC broke below ~USD 60k in late Jan-26. These groups are often controlled by Asia’s largest BTC whales, whose net worths were effectively cut in half from Sept 2025 to Jan 2026 as BTC traded from ~120k to ~60k.
• Structured bets gone wrong (IBIT calls): Many Asia FOs loaded up on short‑dated IBIT call options, implicitly betting BTC would hold above the April 2025 “Trump tariff” lows (~75k). BTC touching 60K left these positions deeply out of the money.
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