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Up from zero: Hedge fund industry firmly positive YTD with August performance

Tuesday, September 15, 2020
Opalesque Industry Update - The global hedge fund industry continues to climb out of the turmoil created by the Covid-19 pandemic. The industry gained an average of +2.5% in August, bringing the year to date (YTD) average return firmly into positive territory at +2.21%, according to the just-released August eVestment hedge fund performance data. This is a welcome change from the virtually 0% YTD average return (-0.27% to be exact) the industry achieved in July and the several months of challenging returns in the middle of the year.

Almost every major hedge fund type and strategy eVestment tracks put up positive average returns for August and most hedge fund types and strategies are now showing positive average returns for the year, indicating that the industry is regaining its footing following a challenging few months.

Event Driven-Activist hedge fund strategies were among the big performance winners in August, with an average return of +7.88%. These funds now stand at +3.25% YTD, which while positive, is far from the +17.46% average return Event Driven-Activist funds produced in 2019.

Size did not seem to be an advantage in August, according to eVestment's data, as the 10 largest reporting funds' average returns in August and YTD are meaningfully below the industry averages: +0.32% for the 10 largest reporting hedge funds vs. +2.5% for the industry, and -1.21% YTD for the 10 largest hedge funds vs. +2.21% YTD for the industry.

Some other interesting points from the new data include:

• India-focused hedge funds saw a surge in performance in August, resulting in average returns of +6.52% for the month. These funds are still negative for the year, at -2.25%, but are heading in the right direction.

• YTD Convertible Arbitrage funds have produced the best average returns among primary strategies eVestment tracks. These funds had an average return of +2.64% in August and stand at +6.89% YTD. Nearly 90% of Convertible Arbitrage managers are positive for the year with those posting positive returns seeing average gains near 10%.

• Long-Short Equity funds posted strong results in August, at +3.91%. This brings YTD average performance for Long-Short Equity funds to +3.10%, which is a long way from the average return of +14.30% these funds delivered in 2019.

• China-focused hedge funds are having another strong year. The average return for China-focused funds in August was +1.64%, bringing YTD performance to +17.87%. With continued strong results, China-focused hedge funds could be on pace to exceed the average return of +22.56% the group posted in 2019.

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