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Alternative Market Briefing

Hedge funds outperform broader equity markets in September as value rebounds

Monday, October 25, 2021

Laxman Pai, Opalesque Asia:

Hedge funds outperformed broader equity markets in September, rising against a backdrop where the S&P 500 (SP500) declined 4.6%.

The PivotalPath Hedge Fund Composite rose 0.1% in September, resulting in a 7.4% YTD increase. This was against a backdrop of widely declining markets where the S&P 500 dropped 4.6%. The Composite outperformance of 4.7% vs. the S&P 500 ranks in the top 10% of monthly relative performance since January 1998. In addition, the Composite continues to produce significant alpha (8.2%) relative to the S&P 500 over the last year.

September performance across the board was almost a mirror image of August with almost everything falling, PivotalPath said. Most major equity markets experienced losses except for Shanghai (CSI 300, Shanghai) and Japan (Nikkei, Topix).

"Hedge funds outperformed significantly. Part of this may be explained by hedge funds' general bias toward value which significantly outperformed growth in September, as well as a further shift toward value during the month," it said.

"One the clearest ways to observe the views of the market on Covid, the economy and inflation are captured through the performance of PivotalPath's Social Distance Winners Basket (think Peloton, Zoom, Netflix, etc.) vs. PivotalPath's Social Distance Losers Basket (think Darden, Marriott, Delta, etc.) This month Social Distance Losers s had their revenge, returning 3.6% vs. a loss of 3.1% for Social Distance Winners, increasing......................

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