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Hedge funds remained in the red for second month amid choppy trading conditions and weak global equity performance

Tuesday, April 10, 2018
Opalesque Industry Update - Hedge funds registered their second consecutive month of losses since the start of 2018, with the Eurekahedge Hedge Fund Index declining 0.51%1 in March, while still outperforming the MSCI World Index which ended the month down 2.21%. The average return of global hedge funds was pulled into negative territory in March as choppy trading conditions across commodities, and weaker global equity performance continued to affect the trading scene.

March was marked by investors' concerns over the US and China trade war which made headlines throughout the month and negatively affected the global equity markets, most of which ended the month in the red. As of Q1 2018, hedge funds are down 0.10% ahead of underlying markets as the MSCI World Index posted losses of 2.24%.

Close to 56% of managers were in positive territory and roughly 5% posted year-to-date returns in excess of 10% over the first quarter. Latin American managers led among regional mandates this month with their 4.30% gain, while relative value managers topped the table across strategies, gaining 2.92% over the month.

Looking at year-to-date performance, Latin American managers outshone their peers from other regions with gains of 5.21%. Meanwhile, distressed debt hedge fund managers posted the best Q1 2018 performance among all strategies based on preliminary numbers, gaining 2.02% over the quarter, followed by relative value managers who generated gains of 1.01%.

Below are the key highlights for the month of March 2018:
• Hedge funds were down 0.51% during the month, outperforming underlying markets as represented by the MSCI World Index which declined 2.21% over the same period. On a year-to-date basis, managers declined 0.10% while underlying markets were down 2.24%. 43% of managers were in the red as of Q1 2018.

• Asian hedge funds continued their slide with Asia ex-Japan mandates down 1.79% during the month with losses among India and China dedicated managers coming in at 2.47% and 0.79% respectively as preliminary numbers showed. Japanese managers were also down 0.95% in March and down 0.84% year-to-date.

• Event driven hedge fund managers posted the steepest decline, down 3.04% during the month - their worst monthly performance since January 2016. Q1 2018 losses for the strategy came in at -2.53%, the worst among all strategic mandates.

• Emerging market mandates were down 0.22% with losses mitigated by Eastern Europe and Russia mandated funds' performance. Frontier market mandate, as represented by the Eurekahedge Frontier Markets Hedge Fund Index was up 0.87% for the month.

• The Eurekahedge Billion Dollar Hedge Fund Index which tracks the performance of the hedge fund industry heavy weights was down 0.45% in March, bringing their Q1 2018 performance into the red, down 0.38%.

• The CBOE Eurekahedge Short Volatility Hedge Fund Index declined 0.88% in March based on early numbers, with year-to-date losses for the index coming in at 7.62% and expected to increase as the complete picture emerges. Meanwhile relative value and long volatility focused strategies are up 1.01% and 1.21% on an asset weighted basis.

• The Eurekahedge Crypto-Currency Hedge Fund Index declined 42.49% in March, bringing its Q1 2018 losses to 56.67%, barely behind of the 51% decline in the price of bitcoin in the first quarter of 2018.

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