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Hedge fund managers were down 0.72% in April, outperforming the tech-heavy NASDAQ and S&P 500

Tuesday, May 24, 2022
Opalesque Industry Update - Hedge fund managers were down 0.72% in April, outperforming the tech-heavy NASDAQ and S&P 500 by 12.54% and 8.08% respectively. Around 80.1% of global hedge funds have outperformed the S&P 500, while 44.4% of them have generated positive returns in April. On a year-to-date basis, global hedge funds were down -1.83%, outperforming the S&P 500 which returned -13.31% over the same period.

In terms of asset flow, global hedge funds posted net investor redemptions of US$50 billion partially offset by performance-based growth of US$6.9 billion over the first four months of 2022. CTA/managed futures, macro and multi-strategy were the top positive contributors over the period as they reported accumulated performance-based gains of US$61.9 billion as of April 2022, offset by performance-based losses of US$39.4 billion incurred by the long/short equities strategy over the same period.

On an asset-weighted basis, hedge funds were down 0.71% in April, as captured by the Eurekahedge Asset Weighted Index - USD, slightly outperforming its equal-weighted counterpart by 0.01%. On a year-to-date basis, the Eurekahedge Asset Weighted Index - USD was down 1.07% over the first four months of the year..

The ability of large size hedge funds to diversify their assets have paid off in this challenging period as they have outperformed their smaller peers, with the billion dollar and large-size hedge funds returning 0.18% and -0.07% in April respectively, while their medium and small-size counterparts posted relatively larger losses of -0.92% and -1.04% respectively. In terms of year-to-date returns, the Eurekahedge Billion Dollar Hedge Fund Index was up 0.54%, outperforming their medium and small-size peers which posted losses of -2.08% and -2.26% respectively.

The Eurekahedge European Hedge Fund Index was down 0.46% in April, outperforming the DAX Index by 1.74% during the month. European equities reported smaller losses compared to their US counterparts, supported by strong corporate earnings in the region and the relatively less hawkish ECB monetary policy stance than was expected by the market. In terms of year-to-date return, European hedge funds were down 4.49% as of April 2022, with around 40% of them maintaining a positive performance over the first four months of the year.

The Eurekahedge Multi-Strategy Hedge Fund Index was down 0.61% in April, bringing its year-to-date return to -0.49% over the first four months of 2022. In terms of their asset flow, multi-strategy hedge funds were the most consistent amidst the heightened market volatility as they recorded their fifth consecutive month of performance-based growth. In April, multi-strategy fund managers reported performance-based gains of US$8.0 billion, while accumulating a performance-based growth of US$20.9 billion throughout the year.

The Eurekahedge North American Hedge Fund Index was down 1.74% in April, outperforming the S&P 500 by 7.06% during the month. In a bid to curb rising inflationary pressures, the Federal Reserve has raised their policy rate by 50bps in May and expects to conduct further rate hikes in the coming months, leading to increased bearish sentiment in the region. On a year-to-date basis, North American hedge funds were down -3.27%, with its underlying long/short equities sub-mandate posting -7.02% of losses over the first four months of the year.

The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 2.93% in April, posting its fifth consecutive month of positive performance and best 5-month run since 2011, with an accumulated return of 10.17% since end-December 2021. Fund managers benefitted from higher commodity prices particularly in energy and agriculture, driven by supply chain bottlenecks caused by the ongoing geopolitical conflict. On a year-to-date basis, CTA/managed futures managers were up 9.40% over the first four months of 2022, with around a quarter of them generating a return more than 20%.

The Eurekahedge Long Short Equities Hedge Fund Index was down -2.29% in April, bringing its year-to-date return to -5.89% as of April 2022. The hawkish Federal Reserve, higher commodity prices and lockdowns in China have contributed to the weak performance of the global equity markets during the month. Around 38% of long/short equities hedge funds have maintained a positive performance in April, while 10% of them have generated a double-digit return in 2022.

Fund managers focusing on cryptocurrencies as represented by the Eurekahedge Crypto-Currency Hedge Fund Index declined 12.87% in April, bringing their year-to-date return to -20.28%. Similar with other risk asset classes, the market turmoil has also impacted the cryptocurrency market. Bitcoin was down -18.01% in April, and as at the time of writing is currently trading below US$30,000, sharply lower than its all-time high of around US$65,000.

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