BlackRock's $1.7 billion Obsidian hedge fund plunged 20% in March as the coronavirus threw fixed-income markets into turmoil

AP

• The fixed-income-focused fund lost 20% from March 1 through March 20, sources told Business Insider. The fund manages roughly $1.7 billion.
• For the year, the Obsidian fund is down more than 19% after returning more than 13% in 2019.
• Credit markets have been rocked by evaporating liquidity, ratings downgrades, and the Federal Reserve's decision to cut interest rates to zero. The Fed has since enlisted BlackRock to set up three different bond-buying programs.
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BlackRock's oldest hedge fund, its 24-year-old Obsidian fund, was hit hard in March, sources say, falling 20% as of March 20.

The $1.7 billion fund is down more than 19% for the year after earning more than 13% in 2019. The hedge fund, managed by Stuart Spodek, invests in rates, mortgages, and corporate credit across the fixed-income universe.

With the spread of the novel coronavirus, fixed-income markets have been rocked by ratings downgrades, evaporating liquidity, and an emergency Federal Reserve move to lower its benchmark rate to near zero. The Fed has since enlisted BlackRock to lead three different bond-buyback programs on mortgages, ETFs, investment-grade corporate credit, and more.

BlackRock declined to comment on the fund's performance.

Credit investors have been inundated with action over the past month, as municipal bond ETFs trade at steep discounts, ratings agencies downgrade well-known companies' debt to junk status, and investors call well-known distressed players to try and get money in their funds.

Funds focused on mortgage-backed securities have faced margin calls, and one fund has even sued its lender,RBC, for being aggressive in asking for its money back.

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