Hedge Funds Return Positive Performance In H1 2016 by Preqin
All leading strategies posted positive performance through the first half of 2016, with macro and credit strategies recording the highest returns
The Preqin All-Strategies Hedge Fund benchmark reveals that hedge fund performance has stabilized after a volatile start to 2016, and recovered from losses seen in the first quarter. The industry posted gains of 0.15% in June, despite global market turbulence leading up to and following the Brexit vote; this represents a fourth consecutive month of positive performance. This streak of positive industry performance has resulted in hedge funds reporting returns of 2.15% for the second quarter, which in turn, has driven overall gains of 1.36% through H1 2016. Despite this, 2016 represents the lowest H1 performance for the hedge fund industry since 2008, when funds saw losses of 0.53%.
Philip Carret was an investor and founder of Pioneer Fund, one of the first mutual funds in the United States. Carret ran the mutual fund for 55 years, during which time an investment of $10,000 became $8 million. That suggests he achieved a compound annual return of nearly 13% for his investors. Q1 2021 hedge Read More
Macro strategies generated the strongest returns in June with gains of 1.15%, and are also outperforming all other leading hedge fund strategies across H1 with performance of 3.18%. Credit strategies funds also saw positive returns in June, making gains of 0.44%, and overall have posted robust H1 gains (+2.53%), while multi-strategy funds were the only other strategy to record gains (0.40%) in June. Other leading hedge fund strategies recorded small monthly losses; equity strategies returned -0.02% and relative value funds saw negative performance of -0.10%. Event driven strategies experienced the worst performance in June (-0.50%), yet are still posting gains of 1.74% through H1.
Hedge Funds – Other Performance Facts:
- UK-Based Funds Suffer: After four consecutive months of positive performance, the GBP benchmark returned -0.89% in June, while the EUR benchmark also suffered losses of -0.55%. Hedge funds based in the UK recorded negative returns of 0.64% through June, with H1 2016 performance standing at -1.13%.
- CTAs Stay Strong: Despite losses of 1.00% in May, CTAs returned 2.72% through June to post positive performance of 1.75% through Q2. January and February marked the first time since 2014 when CTAs saw two successive months of gains, and the robust returns of 3.27% through H1, reflect this relative consistency.
- Smaller Funds Win Out: Emerging hedge funds* were the only size classification to record gains (+0.39%) in June, and also recorded the best Q2 (+2.50%) and H1 (+1.89%) performance. Hedge funds larger than $1bn returned -0.02% in June, with medium-sized funds seeing the biggest losses in H1 (-0.70%).
- Volatility Funds see Gains: Volatility hedge funds recorded a fifth successive months of gains with returns of 0.07% in June, taking H1 performance to 2.18%. Activist funds recorded small monthly losses of -1.28%, while systematic funds (+0.91%) saw greater returns than discretionary funds (-0.37%) in June.
- Mixed Picture for Liquid Alts: UCITS posted performance of -0.73% through June, ending H1 2016 with overall losses of 1.73%. In contrast, alternative mutual funds returned 0.40% in June, driving quarterly gains of 1.53%, and positive performance of 1.27% in H1.
“It has been a mixed picture for hedge funds in the first half of 2016. Suppressed commodity prices and turbulence in global markets led to a difficult environment in January and February. Since then, however, the industry has rallied, with all leading strategies, liquid alternatives and CTAs posting gains through the second quarter.
While investors will continue to monitor hedge fund performance closely over the second half of the year, hedge funds will have to respond to market uncertainty following the vote for Brexit. If performance can be sustained in challenging economic conditions, then fund managers will go a long way to restoring the green shoots of investor confidence that have been nurtured over the past four months.”
Amy Bensted – Head of Hedge Fund Products, Preqin