Natixis is out with their april report on hedge funds. All hedge fund strategies not only underperformed but are significantly trailing the market (for a second year in a row). However, short funds are having an awful year, down 12 percent.

All hedge fund strategies, with the exception of Short Sellers, were up in April in spite of a macroeconomic news flow that was disappointing in the euro zone and less good than expected in the United States. Risk appetite seems to be gradually returning thanks to i/ a stabilised political situation in Italy with the formation of a new government after two months of deadlock ii/ expectations of an ECB rate cut and iii/ the very aggressive policy mix being implemented in Japan, with in particular a doubling of the monetary base, i.e. an annual increase of JPY 60-70 trillion. All in all, the hedge fund industry recorded a positive monthly performance for the sixth month in a row: +0.7% for the HFRI index and +1.4% for the DJ Credit Suisse index.

Hedge FundsDirectional strategies, benefiting from their traditionally more defensive positioning, topped the ranking. CTAs in particular were able to take advantage of the major correction in commodities (the GSCI was down 4.4% in the month) as well as the bullish trend in stock markets. Global Macro benefited from their long exposure to US Treasuries and posted a rise of 1.8%.

Long equity bias strategies, shored up by the good performance of all developed stock markets (+1.8% for the S&P500 and +11.8% for the Nikkei), reported a positive performance: +1.6% and +1.3%, respectively, for Long/Short and Emerging strategies. The latter benefited in particular from the tightening of the EMBI credit spread (-19bp).

Relative value strategies were able to take advantage of a favorable equities and credit directional (+1.2% and +0.8%, respectively, for Event Driven and Relative Value Arbitrage). High Yield and Fixed Income Arbitrage funds (+0.6% and +0.3%, respectively) benefited from the good performance of High Yield and US sovereign paper (+1.9% in total return and +1% for government bonds).

Hedge Fund Performance

Although it was not accompanied by unconventional measures, the ECB’s 25bp cut in its refinancing rate to 0.5% as well as the continued improvement in the US labor market were support factors for the stock markets at the beginning of the month. Long bias strategies, which have benefited from this context, have posted a positive performance since the start of the month.

Further reading  AIG Still Top Hedge Fund Holding: Goldman Sachs