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Hedge funds continue four-month streak with 0.54% gains

Tuesday, May 09, 2017
Opalesque Industry Update - Hedge funds posted their fourth consecutive month of gains this year, up 0.54%1 during the month of April. Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) were up 1.17% over the same period.

The Macron vs. Le Pen run-up to the French presidential election provided some relief for the markets especially for European equities as expectations for a Macron victory in the second round seemed likely. In the Eurozone and elsewhere in the world, economic data for Q1 2017 was largely encouraging with indicators pointing towards global economic expansion.

Among regional mandates, Asia ex-Japan mandated hedge funds topped the table for the month, gaining 1.18%, followed by emerging markets and Latin American-focused hedge funds with gains of 1.10% each. Latin American equities were modest in April, with the Mexican IPC Index gaining 1.48% while the Brazilian Ibovespa Index was up 0.48% over the same period. The renegotiations of the NAFTA deal by the Trump administration proved to be a relief for the three countries in the agreement, which would otherwise have seen the NAFTA being abolished. However, much remains to be seen as the extent of renegotiations remains a big question mark. Hedge fund managers allocating into developed mandates were also in positive territory this month with European managers gaining 0.99% while North American and Japanese counterparts were up 0.78% and 0.49% respectively.

On a year to-date basis, hedge funds are up 2.90% while underlying markets gained 6.29%. Latin American hedge fund managers led the table up 7.54% followed by their Asia ex-Japan and emerging markets counterparts with gains of 7.01% and 6.83% respectively.

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

• Hedge funds gained 0.54% in April with underlying markets as represented by the MSCI AC World Index (Local) up 1.17% over the same period. On a year-to-date basis, managers gained 2.90% while underlying markets were up 6.29%.

• Among developed mandates, European hedge funds were up 0.99%, followed by North American and Japanese peers with 0.78% and 0.49% respectively. On a year-to-date basis, European managers were up 3.30% followed by North American and Japanese managers who posted gains of 2.75% and 2.14% respectively.

• CTA/managed futures hedge fund managers retracted 0.21% in April with underlying commodity-focused hedge funds leading much of the weakness, down 1.62% for the month. On a year-to-date basis, CTA/managed futures hedge fund managers declined 0.76% with commodity-focused hedge funds retracting 1.27%.

• Emerging market mandates gained 1.10% for the month with strength led by underlying Asia ex-Japan and Latin American mandates. Frontier markets, as represented by the Eurekahedge Frontier Markets Hedge Fund Index is up 1.39% for the month.

• The Eurekahedge Long Short Equities Hedge Fund Index gained 0.93% during the month with strength led by underlying equity long-bias hedge funds which gained 1.25% over the same period. On a year-to-date basis, long/short equities hedge fund managers gained 4.68% with underlying equity long bias hedge fund managers at 6.79% YTD.

• Asia ex-Japan mandated hedge funds outshone regional peers, gaining 1.18% during the month. Underlying Greater China and India hedge fund managers were up 0.83% and 3.45% over the same period respectively. On a year-to-date basis, Greater China and India mandated hedge funds posted impressive gains, up 8.60% and 14.62% respectively.

• Among volatility-focused hedge funds, short volatility hedge funds topped the table for April, gaining 1.13% while long-volatility hedge funds posted the steepest decline, down 1.25%. On a year-to-date basis, short volatility hedge funds gained 4.71% while tail risk hedge funds were down 5.73%.

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