With all the talk of diminishing hedge fund returns and big redemptions, there are several categories in the HSBC Hedge Weekly performance report that appear to be bucking the trend. In some cases, category averages are significantly influenced by strong constituent performance, with many low volatility strategies in the credit space outpacing bond benchmarks and turning in some of their best historical performance.

Also see Hedge Fund Letters To Investors – Top Funds

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Macro Systematic category largely driven by performance of one fund

With the stock market up 7.98% year to date, as measured by the S&P 500 Total Return Index, hedge funds have been underperforming again and this is leading to asset withdrawals. The HFRI Fund Weighted Composite Index up 2.98% year to date and the Asset Weighted Composite down -0.7% giving up significant performance to the passive stock index.

Likewise, the majority of categories in the HSBC Hedge Weekly performance listing are underperforming the stock market, notably led by healthcare and financially-focused strategies. Equity Long / Short is having trouble in Japan, down -13.83% as a category, while Global Equity-Diversified is down -3.24%.

While hedge funds in general have been delivering muted performance, not all hedge fund strategies are suffering in 2016. Of the major hedge fund categories with at least 5 constituents, the top major category in the HSBC hedge fund performance list is the systematic global / macro strategy, up 12.24% year to date.

Strategy performance is driven by the $1.3 billion QuantEdge Global Fund, which is currently in second place on the 2016 absolute returns list with 44.35% as of July 31. The fund, whose systematic categorization was recently questioned, is hitting its volatility target of 30% and has a worst drawdown of -44.65%.

Equity Long / Short strategy is not entirely in the red

A JPMorgan report out Wednesday says sector rotation is in part causation for Long / Short strategy underperformance, but not all such categories are underperforming.

The Equity Long / Short Diversified Emerging category, unlike other Long / Short equity categories, is up 7.52% year to date. The category of mostly smaller sized hedge funds is led by the $147 million Firebird Republics Fund, up 20.57% — but also featuring annualized volatility of 28.86% and a worst drawdown of 73.20%.

Debt strategies generally outperforming their beta

Emerging market credit is a strong hedge fund category with generally moderate volatility and is up 7.25% year to date. A notable in the category is Abdallah Guezour’s $3.4 billion Schroder ISF Emerging Market Debt fund, up 12.44% year to date with annualized volatility of 5.42% and a worst drawdown of 9.31% over a track record starting in 2002.

With 13.55% and 15.20% year to date returns respectively for Moneda Latin American Corporate Debt Fund and IP All Seasons Asian Credit Fund, each with volatilities hovering close to 10%, these offerings are beating their category benchmark in absolute return.

The Distressed Security category is up 5.94% year to date. Interesting performers in the generally low volatility category include Jason Mudrick’s $1.3 billion Distressed Opportunity Fund, up 32.36% year to date after losing -25.71% in 2015. Currently #4 on the HSBC top 20 performance list, the fund only has 9.79% annualized standard deviation against a worst drawdown of -31.42%.

Fixed income arbitrage, which is frequently a lower volatility category, is up 4.26% year to date. Leading the pack is Anaud De Bevy’s $166 million Axonic Systematic Arbitrage Overseas Fund, up 14.44% year to date and sporting the highest annualized volatility in the category at 10.57% — respectable in most alternative strategies but in fixed income arbitrage slightly on the volatile side. The two year old LMR Alpha Rates Trading Fund, with $787 million under management, is up 8.50% year to date with volatility at just 2.35% — a figure that is not as credible given the short track record. The $1.3 billion Pine River Liquid Rates Fund has the third highest absolute performance, up 7.35% year to date with average annualized volatility of just 5.69%.