Opalesque Industry Update- Hedge funds posted their strongest start to a calendar year since 2000, with significant contributions from strategy areas which underperformed in 2011, according to data released today by HFR, the leading provider of data, indices and analysis of the global hedge fund industry. The HFRI Fund Weighted Composite Index gained +2.14 percent in February, bringing performance through the first two months of 2012 to nearly 5 percent. The recent gains have nearly recovered the -5.26 percent decline from 2011, a year in which total hedge fund industry capital rose by 3 percent to $2.02 Trillion.|
Equity Hedge funds have had the most significant contribution to HFRI performance in 2012, with the HFRI Equity Hedge Index gaining +6.9 percent through February . Gains have been broad-based across Equity Hedge sub-strategies, including Fundamental Growth, Value and Energy, with the only Short Bias funds detracting from gains.
Positive performance in 2012 has been broad-based across all main strategies, with Event Driven, Relative Value Arbitrage and Macro also posting gains in early 2012. Equity, M&A and credit-sensitive strategies have posted strong gains, with the HFRI Event Driven Index gaining +1.9 percent in February (+4.6 percent YTD) with significant positive contributions from Activist and Special Situations hedge fund strategies. Similarly, fixed income-based Relative Value Arbitrage funds gained +1.7 percent in February (+3.6 percent YTD) as spread tightening and strong liquidity contributed to Arbitrage gains. Macro funds have also posted gains despite the volatile commodity and trend following environment. The HFRI Macro Index, which gained +1.2 percent in February, has gained +2.4 percent YTD despite declines across most commodity focused hedge funds. Systematic, trend following Macro funds gained +1.1 percent in February and have gained +1.5 percent for 2012.
Hedge funds investing in Emerging Markets have also posted strong gains, with the HFRI Emerging Markets (Total) Index gaining +4.3 percent in February and +9.3 percent through the first two months of 2012. While performance has been strong across all Emerging Markets regions, the strongest gains have been in funds investing in Russia and Eastern Europe, gaining +12.7 percent through early 2012.
"Hedge fund performance through early 2012 has benefitted from improvement or total reversal of the trends, sentiment and volatility which contributed to the challenging environment in 2011," said Kenneth J. Heinz, president of HFR. "While many of the macroeconomic risks remain salient in the current environment, fundamental and convergence oriented themes and positions have gained traction on improvements and optimism across US and European economic outlooks. While equity market volatility may rise from early 2012 subdued levels, hedge funds are well positioned in the current environment to opportunistically adjust exposures and generate gains across multiple asset classes globally in 2012."