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Alternative Market Briefing

The flaw of lumping hedge funds together: Macro, credit and relative value actually posted gains in 2018

Friday, February 22, 2019

Laxman Pai, Opalesque Asia:

The negative returns for the hedge fund industry as a whole in 2018 have masked an improvement in the overall environment for the asset class.

While equity strategies funds did experience losses for the year, macro, credit and relative value strategies all made gains, albeit small gains, said the 2019 Preqin Global Hedge Fund Report.

Over the longer term, hedge funds have posted returns comparable with the S&P 500, while seeing significantly lower volatility.

Additionally, given that the majority of hedge fund investors feel that the market cycle is at a peak, many are looking to lean on hedge funds to offer diversification for capital protection as they position themselves in expectation that a correction is imminent.

In fact, more investors are looking to increase rather than decrease investments in hedge funds - the largest proportion of investors which have reported this since 2014.

"It's hard to deny 2018 was a challenging year for hedge funds, with a particularly difficult Q4 taking the All-Strategies benchmark into negative territory for the year. Examining the data in more detail, however, reveals a more nuanced picture; equities strategies carried the bulk of the losses, while other strategies made small gains," Amy Bensted, Head of Hedge Funds said.

"Although the majority of investors reported that their return expectations had not been met in 2018, investors are turning to hedge funds to protect against ......................

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