Hedge funds suffered disappointing returns in June, with all strategies posting negative returns for the first time in over 12 months, according to data released today by research firm Preqin. Despite the losses, hedge funds are looking at opportunities in Europe right now.

Hedge funds recorded a 12th consecutive positive month following positive returns in April and May, but suffered a setback with -1.52% returns in June.

Hedge funds disappointed in second quarter

Overall returns for the whole of the quarter were poor, with single-manager hedge funds posting returns of just 0.14%, compared to 3.29% in Q1 2013. Funds of hedge funds were down -0.61% and UCITS hedge funds dropped -0.68%. CTAs posted the biggest loss in Q2, at -2.30%, counteracting the positive returns of 1.24% in Q1.

Hedge Funds

Event driven was the best in Q2, long/short funds wiped out in June

Event driven strategies continue to lead the pack in regards to performance in 2013, posting returns of 2.30% in Q2, followed by relative value (+0.82% in Q2) and long/short funds (+0.32% in Q2),although the strong returns of 1.33% of long/short funds in May were more than wiped out by the -1.66% in June. Funds pursuing multi-strategy themes, macro strategies and CTAs all produced negative returns.


North America & Europe-focused funds were best performing in Q2 2013

North American (+1.48%) and European hedge funds (+1.37%) both outperformed Asia-Pacific hedge funds in Q2 2013 (+1.01%), although strong Q1 performance of Asia-Pacific funds means it is still the top performing region in 2013 YTD, while emerging markets-focused funds faired worst, with a decline of 1.58% (Fig. 3).


Under performed compared to the S&P 500 index

Hedge funds again under performed compared to the S&P 500 (INDEXSP:.INX) index in Q2 and they trail the index by 8% over the past 12 months (Fig. 4).


Fund Launches Accelerate In Europe

Fund managers are now seeing more opportunities in Europe. Following a slow start to 2013, Europe-focused hedge funds represented 16% of funds launched in Q2, compared to 2% in Q1. Overall, 300 hedge funds have launched this year, according to Preqin data.

Hedge Funds will be waiting to see improvement in July’s figures

“The third quarter of this year could prove to be a decisive one for the industry; investors are still hungry for strong performance following weak returns in 2011 and the flat to negative performance in Q2 has dampened the year to date success of hedge funds,” said Amy Bensted, head of hedge funds product at Preqin. “Investors and fund managers alike will be waiting to see improvement in July’s figures in the hope that the industry can recover from the disappointment in June.”