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Hedge funds down 8.03% in March, but manage to outperform equity markets as coronavirus shakes markets and economies

Tuesday, April 14, 2020
Opalesque Industry Update - The hedge fund industry tracked the fates of other markets and broader economies roiled by the novel coronavirus pandemic in March, posting an 8.03% loss for the month, according to the Barclay Hedge Fund Index.

The hedge fund industry fared much better than the S&P Total Return Index which was down 16.2% for the month.

Year-to-date, the hedge fund industry was down 10.83% through the end of March. The S&P 500 Total Return Index was down 19.6% over the same time period.

All but four hedge fund sectors were in the red for March, as government-imposed shutdowns, stay-at-home orders and frightened consumers slammed the brakes on business activity around the world.

"March was Wall Street's worst month since 2008, and the first quarter was the Dow's worst first quarter ever," said Sol Waksman, president of BarclayHedge. "While markets tried to rally at times on hopes of government stimulus, overall, the uncertainty, economic disruptions and fears surrounding the coronavirus proved too powerful a foe."

Not surprisingly, among the four sectors in the black in March the leading gainer was the Volatility Trading Index, up 19.25% for the month. The Option Strategies Index gained 7.36%, the Equity Market Neutral Index up 0.65% and the Emerging Markets Global Fixed Income Index was flat in March.

Emerging markets were hit especially hard. Among the sectors posting the largest losses in March were the Emerging Markets Latin American Equities Index, down 22.44% for the month, the Emerging Markets Global Equities Index, which lost 18.54%, the Emerging Markets Latin America Index, down 18.32%, the Emerging Markets Asian Equities Index, off 13.49%, the Event Driven Index, losing 12.27%, and the Emerging Markets MENA Index, down 11.25%.

Year-to-date, the Volatility Trading Index and Option Strategies Index stood alone in the black, respectively gaining 19.17% and 3.76% through the end of March. The remaining sectors all posted year-to-date losses.

The Emerging Markets Latin American Equities Index was down 28.55% year-to-date, the Emerging Markets Global Equities Index was off 25.38%, the Emerging Markets Latin America Index lost 24.22%, the Emerging Markets Asian Equities Index was down 15.81%, and the Emerging Markets MENA Index lost 15.65%.

"The coronavirus has hit emerging markets even harder than other economies as prices for oil and other commodities have plummeted and investors looked to unload what they perceived to be riskier investments," Waksman said.

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