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Alternative Market Briefing

Hedge funds go negative in January, but still outperform the index - eVestment

Friday, February 14, 2014

Bailey McCann, Opalesque New York:

Hedge funds protected against broader industry declines, falling an average of -0.56% compared with -3.46% losses by the S&P 500, according to the latest hedge fund performance data from eVestment. As Opalesque has previously reported, volatility strategies, which lagged the industry throughout most of 2013, were well positioned to take advantage of equity markets’ uptick of fear. The group’s January returns were their best in 17 months as the VIX volatility index spiked to its highest level in over a year.

In terms of other strategies, directional equity strategies outperformed the S&P by their largest margin in more than two years. Credit strategies posted mixed returns as directional strategies lagged their relative value counterparts. The deviation signals a decrease in appetite for credit risk which also impacted distressed and event driven strategies. MBS strategies gave credit a bit of a lift overall posting positive returns of 1.1% for the month which was pretty choppy.

Macro and managed futures strategies both posted aggregate losses during the month, continuing a trend of lagging the overall hedge fund industry. Large macro managers outperformed their smaller peers during the month, a continuation of a trend seen in much of 2013.

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