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Laxman Pai, Opalesque Asia: Hedge funds posted their first negative quarterly return for the year in Q3, 2019 with the Preqin All-Strategies Hedge Fund benchmark losing 0.21% .
Among single manager fund types, CTAs produced the highest return (+1.37%), compared with the significant gains of 2.81% made by their multi-manager counterparts, said Preqin.
Although in Q3 the Preqin All-Strategies Hedge Fund benchmark was in the red for the first quarter in 2019, the benchmark gained 2.14% over 12 months to the end of September.
Crucially, it is not the size of the gain that is vital, but the much smaller levels of volatility involved in generating this return.
"With the direction of geopolitical events unpredictable, the impact on markets is hard to determine - with such large swings as we saw in Q4 2018 in equity markets (-14% for S&P 500) and Q1 2019 (+13% S&P 500), hedge funds can help ease the market bumps as we approach the end of the cycle" Preqin said.
For the six-month return to September, CTAs and macro strategies lead the pack. Such funds can reduce correlation to equity markets and be useful investments in times of crisis; over recent years investors have increased their weighting towards these funds in expectation of a correction, despite underwhelming performance.
Those investors that have positioned more defensively have been rewarded with superior returns in recent months.
Multi-strategy funds post a return of +1.13% in Q3...................... To view our full article Click here
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