Hedge funds Start off 2013 with Strong Returns: Natixis

Standard assets and hedge funds performances chart

Another very good monthly performance for hedge funds, according to a report from Natixis. After a month of December that already was very positive (+1.5%), the HFRI index was up +2.6% in January. This performance was achieved in a context where all risky assets rallied, in the same way as at the end of 2012. Accordingly, virtually all strategies reported positive performances for the month (excluding Short Sellers and Merger Arbitrage).

Obviously, long equity bias strategies topped the ranking (Long/Short Equity, Emerging), driven by renewed risk appetite in all stock markets (+5% for the S&P500 (.INX) , +3% for the Stoxx, +7% for the Nikkei). Another piece of good news for the month: after a particularly disappointing 2012, CTAs renewed with success (+2.7%), benefiting from the trends in equities, rising commodity prices (energy in particular) and strong exchange-rate fluctuations (JPY, GBP, EUR, etc.). The gains posted during the first half of February also confirm the ability of CTA managers to take advantage of current short-term trends.

Standard assets and hedge funds performances chart

Via Natixis Research

The favourable equities and credit directional was also a support factor for relative value and arbitrage strategies such as Event Driven (+2.1%), Convertible Arbitrage (+2%) and Relative Value Arbitrage (+1.8%). High Yield funds recorded a performance of +1.5% at the end of a month marked by a spread tightening of nearly 40 bp.

key factors chart for hedge funds in 2013

Via Natixis Research

Global Macro, whose exposure to US Treasuries still remains high, suffered as a result of the bond sell-off but nevertheless reported a decent performance for the month (+0.9%), thanks to an opportunistic management of geographical and style equity arbitrages.

February is likely to be trickier for long equity bias strategies, in view of the consolidation in European and emerging markets, Natixis believes. In this environment, Natixis confirm prefers growth managers and expects the US market to outperform.

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