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The HFM Managed Futures Composite Index was up 3.0% in February, after posting -0.2% in January, as the average CTA returned to positive territory YTD (2.8%).

Long/short equity funds continued their rally with a 6.0% average gain year-to-date through February, in one of the industry's best February's in decades. Stock market volatility receded from its retail-frenzied spike in January but remained elevated, creating a ripe alpha environment for long/short managers.

For the first time since the start of the pandemic, value stocks outperformed growth stocks as managers rotated out of tech names and into cyclicals.

Value makes a comeback: The growth-to-value factor rotation in February signalled hedge funds actively positioning portfolios for a post-pandemic economy. Value stocks rallied on the back of steady Covid-19 vaccine distribution and declining hospitalisations, with the market showing optimism on a re-opening of the economy.

Value-oriented investors have patiently waited for a recovery amid a decade of underperformance. Before the recent rotation, price discrepancies between growth and value reached "extreme levels" in late 2020 and was "nearing a three standard deviation event", according to T. Rowe Price.

Gains amid bond sell-off: Against the backdrop of rising inflation expectations, bets on rising commodity prices and lower bond prices were key drivers of returns last month.

Investor flows turned positive for equity managers in February but remain negative YTD. Flows turned negative in February for managed futures managers following negative performance in January.