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Hedge funds up 0.99% with strong performance from the US

Tuesday, March 14, 2017
Opalesque Industry Update - Hedge funds gained 0.99% during the month of February. Meanwhile underlying markets as represented by the MSCI AC World Index (Local) gained 2.72% over the same period. February was marked by strong performance in US equities on the back of Trump's fiscal and monetary policy announcements with the S&P 500 ending the month up 3.78%. Economic data out of the US also shed a positive light on the region with a pick-up in inflation bolstered by retail activity.

Investor expectations of the rate hike by the Fed were also shaped by an increasingly hawkish Fed suggesting that the next rate hike could occur in the very near future. Among regional mandates. Latin American hedge funds managers gained 2.76% while among strategic mandates, distressed debt hedge funds topped the table and was up 1.34% followed by event driven hedge funds which gained 1.19% during the month. On a year-to-date basis, hedge funds are up 1.93%, with 11% of managers posting returns greater than 5% over the same period.

Below are the key highlights for the month of February 2017:

  • Hedge funds gained 0.99% in February with underlying markets, as represented by the MSCI AC World Index (Local) up 2.72% over the same period. On a year-to-date basis, managers gained 1.93% with 11% of them posting returns in excess of 5%.
  • Among developed mandates, North American hedge funds were up 0.77%, followed by European and Japanese counterparts which gained 0.46% and 0.30% for the month respectively. On a year-to-date basis, North American managers were up 1.78% followed by Japanese and European managers who posted gains of 1.57% and 1.09% respectively.
  • All strategic mandates were up in February with distressed debt hedge funds posting the best returns, gaining 1.34%, followed by event driven long/short equities hedge funds which were up 1.19%% and 1.16% respectively.
  • Emerging market mandates were up 1.79% for the month with strength led by underlying Latin America and Asia ex-Japan mandates. Frontier markets as represented by the Eurekahedge Frontier Markets Hedge Fund Index was up 1.00% for the month.
  • The Eurekahedge Long Short Equities Hedge Fund Index gained 1.16% during the month with strength led by underlying equity long-bias hedge funds which gained 2.11% over the same period.
  • Asia ex-Japan mandated hedge funds gained 1.42% during the month with underlying Greater China and India hedge fund managers up 2.77% and 2.86% over the same period respectively. On a year-to-date basis, Greater China and India mandated hedge funds posted impressive gains, up 5.52% and 6.64.
  • Among volatility-focused hedge funds, short volatility hedge funds topped the table for February, gaining 0.57% while long-volatility hedge funds posted the steepest decline, down 0.88%. As of 2017 year-to-date, short volatility hedge funds gained 2.04% while tail risk hedge funds were down 2.96%.

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