The encyclopedia · Trading & Investing · Financial decision · 2025
Millennium's index-rebalancing teams made billions — then lost ~$900M in early 2025
Two teams betting on which stocks would join and leave major indexes lost ~$900M in early 2025 when their crowded, leveraged trades hit a sharp market swing.
Millennium Management · 2025-02
What happened
Millennium Management, one of the world's largest multi-manager hedge funds with roughly $75 billion under management, ran two dedicated index-rebalancing teams. Led by Glen Scheinberg (a group known as SRBL) and Dubai-based Pratik Madhvani, they bet on which stocks would be added to and removed from major market indexes — a strategy that had generated billions of dollars in profits for the firm over the years.
In early 2025 the trades turned sharply against them. The two teams together lost roughly $900 million, and each manager lost "hundreds of millions" as the bets unwound. February 2025 was Millennium's worst monthly performance in more than six years, a 1.3% decline for the fund, according to the Wall Street Journal.
The losses followed a stretch of elevated single-stock volatility that upended the crowded, heavily leveraged bets the strategy relied on. A senior portfolio manager specialising in the same trades, Hong Kong-based Jeremy Ma, left the firm. The episode was a rare public stumble for a hedge fund known for unusually strict risk controls.
Why it happened
- A strategy that had worked for years attracted so much capital that the trades became crowded, leaving the fund exposed when the whole position moved the wrong way at once.
- Leverage on top of the index-inclusion bets meant a normal swing in the underlying stocks produced outsized losses rather than the steady small profits the strategy normally banked.
- Concentrating so much of the book in two teams on one strategy concentrated the risk: when index rebalancing failed, an otherwise diversified $75B fund posted its worst month in over six years.
The lesson
A strategy can be right for years and still be dangerous — when everyone piles into a trade that works, the leverage that made it profitable becomes the thing that breaks it.
Sources
- Hedgeweek (WSJ) — Millennium posts rare monthly loss amid index rebalancing trades
- Investing.com (Bloomberg) — Millennium Management sees $900 million loss from index rebalancing teams
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