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Hedge fund managers up 2.99% in February

Wednesday, March 24, 2021
Opalesque Industry Update - Hedge fund managers were up 2.99% in February - recording their third consecutive month of outperformance against the global equity market as represented by the MSCI ACWI which returned 2.72% over the month. In terms of performance distribution, the top 10% of global hedge funds generated an average return of 11.45% over the first two months of the year, while the bottom 10% declined by 2.68%. In the same vein, more than 70% of the global hedge funds tracked by the Eurekahedge database generated a positive return in 2021.

On an asset-weighted basis, hedge funds were up 1.54% in February, as captured by the Eurekahedge Asset Weighted Index - USD. In terms of 2021 performance, the index is only up 1.21%, highlighting the struggles for some of the larger asset managers as seen in the performance decline of billion-dollar hedge funds.

North American hedge funds gained 3.90% in February, outperforming their European and Asia ex-Japan peers who returned 2.55% and 1.29% over the same month, respectively. The underlying long/short equities mandate of the region was the primary contributor to the index's performance as they returned 5.37% over the month as represented by the Eurekahedge North American Long Short Equities Hedge Fund Index. In terms of year-to-date return, North American hedge funds also have the best performance as they were up 4.98% over the first two months, compared to 4.02% and 2.63% of Asia ex-Japan and European hedge funds.

The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 3.95% in February, recording its best monthly performance since the aftermath of the 2008 global financial crisis. Fund managers with exposure to the energy sector were the primary performance driver to the index, supported by the decision of OPEC and its allied members to cut their oil production which resulted in a sharp increase in oil prices over the month. On a year-to-date basis, the CTA/managed futures managers were up 3.42%, with the top 10% gaining 10.63% on average.

Hedge funds utilising AI strategies were down 0.09% in February, underperforming most of their strategic peers. In terms of year-to-date return, AI hedge funds also lagged the group as they were down 2.52% compared to the 6.69% return of their long-bias sub-strategic peers.

Structured credit hedge funds were one of the most consistent strategic mandates since the market breakdown in March 2020, as they gained 1.06% in February and recorded their 11th consecutive month of positive performance. In terms of year-to-date return, the Eurekahedge Structured Credit Hedge Fund Index was up 2.87% as of February 2021.

Fund managers focusing on cryptocurrencies were up 34.98% in February as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index - posting their highest monthly performance since May 2019. On a year-to-date basis, cryptocurrency hedge funds are having their best start of the year as they generated 74.88% return in the first two months of 2021, thanks to the strong rally of Bitcoin which just recently broke the US$60,000 level.

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