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On an asset-weighted basis, hedge funds were down -0.29% in February, as captured by the Eurekahedge Asset Weighted Index - USD. The ability of larger hedge funds to allocate their AUM flexibly to manage volatility enabled them to outperform against their smaller peers during the month.

Billion-dollar hedge funds as represented by the Eurekahedge Billion Dollar Hedge Fund Index were down -0.45% while medium hedge funds as represented by the Eurekahedge Medium Hedge Fund Index posted relatively larger losses of -0.70%.

The Eurekahedge Europe Hedge Fund Index was down -1.46% in February, underperforming their developed market peers as represented by the Eurekahedge North American Hedge Fund Index and Eurekahedge Japan Hedge Fund Index which were up 0.21% and 0.15% respectively. The ongoing conflict between Ukraine and Russia have resulted in a weaker equity market in the region, with DAX and CAC 40 down -6.53% and -4.86% in February.

The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 1.78% in February, outperforming their strategic mandate peers. Fund managers benefitted from the sharp increase in commodity prices due to the ongoing conflict in Ukraine and Russia as the US and their European Allies impose sanctions on Russian oil and gas, exacerbating the already tight global oil supply.

In terms of asset flow, CTA/managed futures fund managers also recorded the largest performance-based gains and investor allocations of US$11.5 billion and US$7.3 billion respectively - posting their highest monthly AUM increase in the history. On the other end of the spectrum, their long/short equities counterpart logged US$13.2 billion of performance-based losses and US$7.0 billion of investor redemptions over the same period.

The Eurekahedge Fixed Income Hedge Fund Index was down -1.44% in February, posting their weakest monthly performance since the market meltdown in March 2020. The higher inflation rates, particularly in the US which is the highest in the last four decades have led into an extremely hawkish Federal Reserve which just raised their fed fund rates by 50 bps this March and are expected to increase again their rate by half percentage point this June.

Emerging markets hedge funds were down -1.28% in February, bringing their year-to-date return to -2.78% over the first two months of the year. The hawkish stance of the Federal Reserve on top of the geopolitical conflict in Eastern Europe have resulted in a stronger US dollar and a weaker equity market in the developing region.

Tail risk and long volatility hedge funds generated positive returns in February and were up 3.81% and 0.84% respectively, driven by heightened market volatility, with the CBOE VIX reaching 31.28 by the end of February. The ongoing war between Russia and Ukraine have triggered risk-off market sentiment throughout the month. On the other hand, their relative value and short volatility peers were down by -1.34% and -0.43% over the same month respectively.

Fund managers focusing on cryptocurrencies gained 4.29% in February, ending their three-month losing streak since November 2021. Despite the ongoing Russia-Ukraine war, Bitcoin was surprisingly less affected by the market volatility, retreating by only -0.58% in February. Russian investors increasingly view digital assets as an alternative way to move financial assets away from the Russian rouble, which has depreciated more than 40% as Russia was banned from accessing the global SWIFT payment system due to sanctions imposed by the US and their European allies.

The Eurekahedge Trade Finance Hedge Fund Index was up 0.53% in February, bringing its year-to-date return to 1.06% as of February 2022. Amidst the rising yields driven by inflationary pressures and geopolitical conflict in the Eastern Europe region between Ukraine and Russia resulting in heightened market volatility, trade finance hedge funds remained resilient by delivering consistent positive returns to their investors.