January proved to be a good month for hedge funds; although their performance still lagged the S&P 500 index, it was better overall than early 2012. HFRI Index rose 2.6 percent in January with most of the hedge fund strategies outperforming except for Short-selling (-5 percent) and Merger Arbitrage (-0.07 percent), according to data from Natixis Research.
The rally in risky assets gave shortsellers a tough time but produced big returns for long biased equity funds. L/S Equity and EM Strategies especially churned out sizable returns. Strategies that came back with vigor in the new year were CTAs and FOF (Fund of Funds).
Funds which underperformed in 2012 have picked up in the new year. An example is R. G. Niederhoffer Capital which was up as much as 8 percent in one of its strategies in January. Another recovery was witnessed in Bramshott Capital’s Bramshott Europe Fund which posted a gain of 3.15 percent in January after finishing last year at barely+0.23 percent.
Bramshott gained from its long positions in EADS NV (EPA:EAD), Philips Electronics, Azimut Holding SpA (BIT:AZM), 3i Group plc (LON:III) and Barclays PLC (NYSE:BCS) (LON:BARC). Bramshott lost in its short positions in a European auto company, Fresnillo Plc (LON:FRES) Scania AB (STO:SCV-B).
Brevan Howard’s flagship Brevan Howard Master Fund produced less than stellar returns in last year, The BH Master fund was up only 3.8 percent in 2012, however some other strategies managed good profits. In January the Macro focused BH Master Fund posted a profit of 0.96 percent which is again less than several other Macro funds that have managed healthy returns in previous month. However Net asset Value of Brevan Howard Ltd rose 1.33 percent in Jan which is a good start to the year. NAV was up 4.4 percent in 2012.
Brevan Howard’s funds that have done particularly well in January include: BH Emerging Markets Strategies Master Fund, up 2.15 percent; BH Credit Catalysts Master Fund, up 1.75 percent; BH Commodities Strategies Master Fund, up 2.89 percent; BH Systematic Trading Master Fund, up 2.88 percent and Credit Value Fund Master Fund up, 2.17 percent.
Note the good returns from Brevan Howard’s CTA and EM focused fund, both strategies have been doing well according to data from Natixis. In Commodities, BH made gains from oil, precious metals, specifically platinum group metals.
Brevan Howard’s outlook on Eurozone is mixed, Germany is expected to show growth which will be anchored by recovery in China and the U.S. However France and Italy remain the ailing arms where growth will be slower. In case of Japan, while in the short term yen weakening will boost earnings the country still has structural reformation to do in the corporate sector and take care of its rising government debt.