Hedge Funds Post Best Monthly Returns Since January 2012 by Preqin

Preqin All-Strategies Hedge Fund benchmark posts 2.82% in March as all leading strategies make gains

The Preqin All-Strategies Hedge Fund benchmark posted 2.82% in March, the best monthly return for the asset class since January 2012 (+3.06%), and only the third positive monthly return since May 2015. All leading hedge fund strategies posted gains, with equity strategies seeing the highest returns of 3.79%. However, after posting negative returns in the previous two months, performance for equity strategies funds in 2016 YTD stands at -1.10%, the worst of any leading strategy. Overall, hedge funds are still showing negative performance for the year, with losses of 0.28% in 2016 YTD.

Macro strategies continued their strong recent performance, as returns of 0.20% took their 2016 YTD performance to 1.13%; this is the highest YTD return for any leading strategy, and macro strategies funds are the only fund type to have posted positive monthly returns throughout the year. Another strategy posting positive returns for the opening quarter of 2016 is relative value funds, which gained 2.09% in March to put their YTD performance at 0.46%. Event driven strategies recorded just their second positive month in the last ten to return 2.55%, while multi-strategy funds continued from gains of 0.21% in February to post 0.77% in March.

Hedge Funds

Hedge Funds – Other Key Performance Statistics:

  • Discretionary Funds: For the first time in 2016, discretionary hedge funds (+3.00%) recorded better performance than systematic funds (+0.65%). However, while systematic hedge funds are still returning a positive 0.18% for the year-to-date, discretionary funds are posting losses of 1.21%.
  • CTAs Post Losses: CTAs saw their first month of losses in 2016, returning -1.73%. This cancels out most of their gains in February, when they returned 1.87%; however, the strong start to the year for CTAs still puts their year-to-date performance at 1.03%.
  • Liquid Alts Recover: Liquid alternatives funds recovered in March as alternative mutual funds gained 2.78% following four successive months of losses. After returning -2.63% and -0.62% in January and February, UCITS funds posted 1.74% in March.
  • Activist Funds Surge: Activist hedge funds also posted their best monthly returns since January 2012 as their performance hit 3.75%. Volatility funds, meanwhile, returned a second consecutive month of gains, adding 0.83% to take their 2016 performance to 1.21% at the end of the first quarter of the year.
  • Emerging Markets See Huge Gains: Emerging markets hedge funds returned 5.85% in March, wiping out earlier losses to bring their year-to-date performance to 2.71%. While Asia-Pacific funds returned 5.17%, and North America funds returned 3.25%, Europe funds made gains of just 0.72% in the month.

Comment:

“The opening months of 2016 seemed to pose the same challenges to the hedge fund industry as those that had characterized the second half of 2015; global volatility, losses in public equities, and a continued slump in commodities prices. However, the widespread gains seen in March are an improvement for the industry, which has not seen such a strong monthly return since January 2012.

Although nearly all strategies and geographies posted positive returns, there is a disparity in the strength of gains made between different types of hedge funds. For instance strong returns in emerging markets have been offset by more tepid European performance. Although the returns in March are encouraging, half the leading strategies are still showing negative YTD returns. The industry will need to show further recovery in the coming months to better the gains of 2015 and to win back investor favour.”

Amy Bensted – Head of Hedge Fund Products, Preqin