Allianz Global Investors (AGI), an investing arm of the large German insurance company Allianz SE, announced on March 25 that two of its hedge funds, managing nearly $2.3 billion, would be liquidated. The hedge funds – Structured Alpha 1000 and Structured Alpha 1000 Plus – took unexpected heavy losses in March 2020’s coronavirus stock market crash.
Structured Alpha 1000 and 1000 Plus were highly aggressive funds that included the purchasing of put options that allowed a holder to sell an asset at a predetermined price in the future. Unfortunately, the March selloff was so rapid that the funds were unable to compensate quickly enough and were forced to lock in losses.
Investors were informed one of the funds was down 97% since the start of the year as the liquidation was announced. They were not told what went wrong nor how much of their money they might get back or when they might get it.
If you lost money in Allianz Structured Alpha 1000 or 1000 Plus, you need to ask – should I have been invested in this asset in the first place? Options trading is complex and risky and not recommended for the main street investor. If your financial advisor recommended and placed you in these funds, they may be liable for your losses if the recommendation was not appropriate for your age, income, and experience.