Almost all leading hedge fund strategies post positive returns as industry records seventh consecutive month of gains

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The Preqin All-Strategies Hedge Fund benchmark returned 0.26% in May, marking the seventh consecutive month of positive returns for the industry. Overall, hedge funds have recorded just three months of losses since the start of 2016. Multi-strategy hedge funds posted the highest returns of any leading strategy, at 1.40%, while relative value funds were the only leading strategy to see losses, recording -0.38% for the month. Despite falling slightly, 12-month returns for the industry are at 10.33%, surpassing the expectations for hedge fund performance that investors gave Preqin at the start of the year.

Hedge Fund Performance

Key Hedge Fund Performance Facts:

  • The Preqin All-Strategies Hedge Fund benchmark returned 0.26% in May. Although this is the lowest monthly return recorded in 2017 so far, it does bring overall YTD performance to 4.37%.
  • Multi-strategy and event driven strategies hedge funds posted the highest performance, with gains of 1.40% and 0.51% respectively. Relative value funds saw losses of 0.38%, the only leading strategy to lose ground in May.
  • CTAs posted gains of 0.28% for the month, building on 0.43% returns seen in April. This takes YTD performance into positive territory for the first time in 2017, at 0.09%.
  • UCITS funds saw gains of 0.43% in May, while alternative mutual funds saw marginal losses of 0.04%. In 2017 so far, they have now seen gains of 3.43% and 1.92% respectively.
  • Funds of hedge funds returned 0.43%, maintaining momentum from 0.53% gains seen last month. Over the past 12 months, funds of hedge funds have now posted performance of 4.71%.
  • North America-focused hedge funds posted losses of 0.22% for the month, while Europe- and Asia-Pacific-focused funds both made gains of 1.08%. However, over 12 months North America-focused funds have returned 11.44%, the highest of any region.
  • Medium-sized hedge funds* posted the highest returns of any size classification, returning 0.80% in May. They also overtake emerging hedge funds to post the highest 12-month performance, returning 10.94%.

Amy Bensted, Head of Hedge Fund Products:

“Hedge fund performance has continued to make ground in May, despite some concerns about slowing growth in the US and Europe. There have only been three months since the start of 2016 in which hedge funds saw losses, and this should bolster investor confidence in the asset class. At the end of H1 2016, hedge fund investors reported that they did not broadly expect hedge fund performance to improve in the next 12 months: however, since then the industry performance has reached double figures for the period.

There are also positive signs of sustained momentum in other areas of the industry. CTAs have posted their first backto-back months of gains since November-December 2016, while funds of hedge funds are seeing their longest period of positive performance since May 2015. Fund managers will be looking to capitalize on this momentum to show investors the value of hedge funds in providing downside risk protection and the potential for returns.”

Article by Preqin