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Alternative Market Briefing

Hedge funds lift off with 11.48% returns in Q2 2020

Wednesday, July 29, 2020

Laxman Pai, Opalesque Asia:

Hedge funds returned 11.48% in Q2 2020, the highest gains since 2009, following losses of 10.63% in Q1, said Preqin.

According to the report, hedge funds have broken even for H1 2020, with YTD returns hitting -0.37% as of the end of June.

Hedge fund launches remain timid as the quarter saw just 59 funds launched, a decrease from Q1 2020 when 182 were incepted.

While equity and credit strategies still accounted for the largest proportions of these, there was a significant uptick in the proportion of funds launched pursuing event-driven and niche strategies, reflecting investors' appetite for approaches that have proven more resilient during the recent turmoil.

Equity and credit strategies accounted for the largest proportions of these, at 28% and 18% respectively. This compares to 32% and 13% that they accounted for in Q1, said the report.

However, overall investor sentiment remained cautious: 67% of active mandates in Q2 were for targeting total commitments of less than $50mn, and none were issued for investments of $300mn or more in size, down from 9% in Q1 2020.

Event driven and niche strategies saw a significant uptick in prominence. Event driven funds accounted for 15% of launches, up from 5% in Q1, while niche strategies grew from 7% to 13% in the same period.

Similarly, APAC-focused funds accounted for 14% of launches in Q2, on par with North America-focused funds. This is up from just 5% they accounted for in Q1.......................

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