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January was a positive month for hedge fund strategies tracked by CISDM. The CISDM Equal Weighted Hedge Fund Index is off to a positive start to the year increasing 1.97% for the month. Individual hedge fund strategies performed well across the board. All ten Indices tracked by CISDM had positive returns in January. The CISDM Global Macro Index had the highest return and the CISDM Merger Arbitrage Index and the lowest for the month, respectively returning 3.67% and 0.49%.

The CISDM Fund of Funds Diversified Index recorded a gain of 1.58% for January. Hedge fund performance in January delivered favorable results supported by very strong stock market returns. The S&P500 Index gained 5.73% in January and the Nasdaq Composite Index gained 7.36%. The S&P500 Index recorded its tenth consecutive monthly gain in January. Volatility as measured by the VIX index continues to remain muted, supporting positive stock market returns for the month. On a relative basis growth outperformed income. The top three performing subgroups within the S&P500 in January were Internet, Home Entertainment, and Healthcare Facilities which returned 23.85%, 18.59%, and 12.89% respectively. Those subgroups within the S&P500 sensitive to interest rates fared the worst. Utilities and REIT's had negative returns in January. Both the S&P500 Index and Nasdaq Composite Index reached all-time highs in January.

In aggregate, corporations reporting earnings in January delivered strong results for the quarter along with strong forecasts for the quarters ahead. These corporate results were a strong fundamental driver of strong equity returns for the month benefiting fund strategies with exposure to the equity markets. Hedge funds with strategies leveraged to the equity markets performed well in January. CISDM Long/Short Index returned 1.88% and the CISDM Event Driven Multi-Strategy Index gained 1.27%.

The CISDM Distressed Securities Index gained 2.26% in the month. Interest rates continue to rise to multi-year highs with the generic 10-yr US Gov't bond yield rising 30 basis points for the month to 2.71%. US2-10YR spreads increased 4 basis points to 56 basis points. High yield spreads on corporates against the US 10YR as measured by the CSI BARC Index narrowed by 26 basis points to 305 basis points. Although absolute yields have risen, relative yield measures remained favorable in January.

The Barclays US Aggregate bond index fell 1.15% for the month. The implied inflation rate as measured by the 5YR breakeven US-Gov't and its inflation linked equivalent increased from 1.88 to 2.01 percent. Notable was the ISM Manufacturing Business Prices Index being reported at 72.7 in January, the highest level since 2011.

The CISDM CTA Equal Weighted Index increased 4.01% in January. This was the largest gainer among the Indices tracked by CISDM. The CRB CMDT Spot All Commodities Index increased 2.57% rising from 432.34 to 443.44. Crude oil posted strong returns for the month, reaching multi-year highs. WTIC increased from 60.42 to 64.73, a gain of 7.13%; and Brent increased from 66.87 to 69.05, a gain of 3.26%.

The CISDM Merger Arbitrage Index increased 0.49% in January. Dominion Energy announced its intent to acquire SCANA corporation in an all stock deal for $50.32 per share. At the time of announcement, the deal was valued at $14.5 billion, representing a 31.84% premium. Archer Daniels Midland announced its intent to acquire Bunge, valuing the deal at $11.58 billion.

The CISDM Global Macro Index saw huge outperformance rising 3.67% this month. This was the largest monthly gain in over 22 years. In January, the global investment backdrop continued to remain favorable for hedge fund strategies with exposure to risk assets around the globe.