Sat, Oct 24, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund returns varied in March amid elevated volatility, says eVestment

Wednesday, April 15, 2020
Opalesque Industry Update - March was a highly volatile and dramatic month, not just for global financial markets and the hedge fund industry, but for humanity.

"During the global financial crisis, financial systems were at risk of failing, whereas in March and ongoing, we face larger failures. With the understanding that these are delicate times for all, the following is a look at hedge fund performance amid a global crisis," said Peter Laurelli, CFA, eVestment Global Head of Research.

Hedge funds lost an average of -7.25% in March 2020 bringing YTD returns to -9.87%. March's average loss was the second largest on record, and largest since the height of the global financial crisis in October 2008 when the average fund lost between 8%-9%.

Funds focused on securities within the corporate capital structure, particularly concentrated long-biased strategies (namely activists) and credit strategies (namely distressed), posted the largest average losses in March. Managed futures, market neutral equity and even quantitative directional equity strategies performed relatively well.

Managed futures strategies (not all, but in aggregate) have gone through a prolonged difficult stretch since 2016, but this year has been a different story. Often having a goal of producing returns with low correlations to global markets and able to fair well in difficult times, this year many managed futures funds are doing just that.

The universe of funds was the only primary strategy with positive average returns in March and had by far the best proportion of products able to produce gains, with 53% of managers positive in March. Additionally, some of the largest funds in the space have produced very good results.

Macro funds produced a very wide range of results in March, even among the largest managers illustrating the variety of thematic approaches.

"Too often we see a strategy's returns as being indicative of what to expect from any given fund, but over the course of March we saw just how wrong that assumption can be," Peter said.

While returns from the largest macro managers averaged -3.78%, within that group of large funds there were gains and losses that were two or three times larger.

There were highlights and lowlights to be found in virtually every segment of the industry in March. It is now more important than ever to think of the industry not as a whole, but as a vast group of individuals with discretion, and programs and algorithms with differing and evolving rules. In a group of individuals operating in a pool of markets, some will navigate successfully, and some will not.

Article source - Opalesque is not responsible for the content of external internet sites

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PE/VC: Coronavirus triggers borrowing spree by private equity managers, Venture capital investments reach new high in Brazil, Private-equity giants are racing to sell assets before year-end[more]

    Coronavirus triggers borrowing spree by private equity managers From FT: Private equity managers are turning to specialist borrowing facilities to ensure their highly leveraged strategies can survive the coronavirus pandemic, but there are growing concerns that the use of these complex f

  2. What's behind Viking's strong gains[more]

    From Institutional Investor: Viking Global Investors had strong performance in its three main funds in the third quarter, bringing gains for the year into the mid-to-upper teens. The Tiger Cub hedge fund firm, co-founded by O. Andreas Halvorsen, is far outperforming the broad-market averages a

  3. PE/VC: A record number of private equity funds are in the market - but closing them won't be easy, PE firms must be prepared to face challenges across each fund vintage, Wall Street is helping private equity recycle its old assets[more]

    A record number of private equity funds are in the market - but closing them won't be easy From Institutional Investor: Although there are a record number of private equity funds in the market, they are raising money at a slower pace, delaying fund closes, according to new data from Pre

  4. Franklin Templeton creates new unit with QS Investors[more]

    Laxman Pai, Opalesque Asia: Franklin Templeton will combine recently acquired QS Investors, a Legg Mason subsidiary, with Franklin Templeton Multiasset Solutions (FTMAS) business into a single consolidated unit. Effective Oct. 1, the combined business, called Franklin Templeton Investment Sol

  5. Opalesque Exclusive: A.W. Jones emerging manager fund of funds passes three year milestone, up +12.61% through August[more]

    Bailey McCann, Opalesque New York for New Managers: An emerging manager fund of funds from A.W. Jones has just passed its three-year milestone and is outperforming so far this year. The fund was up 3.29% in August a