Hedge Funds Post Negative Returns For The First Time In 12 Months

By Mani
Updated on

Hedge funds benchmarks are back in red after twelve consecutive months of positive returns, according to a data released by research firm Preqin.

Hedge Funds Post Negative Returns For The First Time In 12 Months

June saw disappointing returns from hedge funds, with all strategies tracked by Preqin recorded a loss, with long/short funds posting the worst returns. Interestingly, the strategy was one of the better performers in May, posting 1.33 percent. The strategy has beaten the year-to-date benchmark by returning 4.48 percent on average in 2013.

On the average, the hedge funds posted a negative return of 1.52 percent in June.

Hedge funds event driven – The most successful strategy

According to Preqin’s recent data, event driven funds were the top performer in June. However, they still saw negative return of 0.85 percent in June, making the average year-to-date average return to 6.57 percent.

Despite posting negative return in June, event driven funds remain the most successful strategy over the past 12 months, posting a healthy 15.85 percent.

On the contrary, relative value funds recorded modest return during first half of 2013. This strategy surpassed the benchmark in June, with a negative return of 0.59 percent. The relative value funds posted a cumulative year-to-date return of 3.40 percent.

The research firm’s recent data reveals multi-strategy funds posted their biggest monthly loss since May 2012, by returning -1.49 percent, making its year-to-date return to a modest 1.86 percent.

Mirroring the poor sentiment, macro funds too posted a negative 1.51 percent return in June, dragging its average cumulative return into negative territory of 0.30 percent for the first time in 2013.

UCITS benchmark too stepped into red territory

The research firm’s UCITS benchmark also followed suit with the other benchmarks. UCITS benchmark too posted an average negative return of 1.75 for June, ending its 12 consecutive positive months.

Interestingly, UCITS’ relative value was the only strategy to stay in black, posting 0.16 percent.

However, macro UCITS funds posted the worst performing return of -2.42 percent last month bringing its year-to-date return to -2.77 percent.

Regional performance

Despite underperforming the main hedge funds benchmark for a second consecutive month, Asia-Pacific funds is still the highest performing fund in 2013 by generating 7.53 percent.

According to Preqin’s report, fund managers are sensing increasing opportunities in Europe, with over 16 percent of hedge funds launched in the second quarter were focused in Europe.

Interestingly, despite poor performance in June, investors continue to have faith over long/short equity.

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