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The US consumer price index has remained persistently high over the recent months, hitting a 40-year high of 8.3% in April, raising the probability that global central banks will push ahead with aggressive tightening despite the risks of slower economic growth. The Federal Reserve has hiked interest rates by 50bps in May, the sharpest increase since 2000 and signalled the possibility of further hikes in the coming months.

Over in Europe, returns were mostly negative among equity benchmarks in the region with the Euro Stoxx 50 down -2.55% while the RTS Index gained 5.90% after the Russian rouble recovered to a more than two-year high of 73.50 against the Euro, supported by capital controls which bans short selling and foreign players from selling shares in Russian companies without permission. Inflation in the eurozone reached 7.5% in April, driven largely by rising energy prices that have the potential to worsen in the coming months if Russia follows through on a plan to cut supplies to countries that refuse to pay for their energy supplies in roubles.

CTA/managed futures mandate performs the best with a return of 2.89%

Returns were negative across geographic mandates in April, except for the Eastern Europe & Russia mandate which posted a return of 17.32% while the Latin American mandate trailed behind their peers with a return of -3.41%. Across strategies, the CTA/managed futures mandate performed the best with a return of 2.89% while the long short equities mandate trailed behind their peers with a return of -2.13%.

Roughly 43.7% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in April, and 96.9% of the hedge fund managers in the database were able to outperform the S&P 500.

Hedge fund managers were down 0.50% in April, outperforming the tech-heavy NASDAQ and S&P 500 by 12.76% and 8.30% respectively. Around 96.9% of global hedge funds have outperformed the S&P 500, while 43.7% of them have generated positive returns in April. On a year-to-date basis, global hedge funds were down -1.60%, outperforming the S&P 500 which returned -13.31% over the same period.

On an asset-weighted basis, hedge funds were down 0.42% in April, as captured by the Eurekahedge Asset Weighted Index - USD, slightly outperforming its equal-weighted counterpart by 0.08%. On a year-to-date basis, the Eurekahedge Asset-Weighted Index - USD was down 0.78% over the first four months of the year.

The billion dollar and large-size hedge funds lose -0.04% and -0.27% respectively

The ability of large size hedge funds to diversify their assets have paid off in this challenging period as they have reported the smallest losses among their peers, with the billion dollar and large-size hedge funds losing -0.04% and -0.27% respectively, compared to the -0.50% and -0.80% loss of their medium and small-size counterparts. In terms of year-to-date returns, the Eurekahedge Billion Dollar Hedge Fund Index was up 0.57%, outperforming their medium and small-size peers which posted losses of -1.76% and -2.15% respectively.

The Eurekahedge European Hedge Fund Index was down 0.29% in April, outperforming the DAX Index by 1.91% during the month. European equities reported smaller losses compared to their US counterparts, supported by strong corporate earnings in the region and the relatively less hawkish ECB monetary policy stance than was expected by the market. In terms of year-to-date return, European hedge funds were down 4.33% as of April 2022, with around 40% of them maintaining a positive performance over the first four months of the year.

The Eurekahedge North American Hedge Fund Index was down 1.66% in April, outperforming the S&P 500 by 7.14% during the month. In a bid to curb rising inflationary pressures, the Federal Reserve has raised their policy rate by 50bps in May and expects to conduct further rate hikes in the coming months, leading to increased bearish sentiment in the region. On a year-to-date basis, North American hedge funds were down -3.18%, with its underlying long/short equities sub-mandate posting -6.88% of losses over the first four months of the year.

The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 2.89% in April, posting its fifth consecutive month of positive performance and best 5-month run since 2011, with an accumulated return of 10.13% since end-December 2021. Fund managers benefitted from higher commodity prices particularly in energy and agriculture, driven by supply chain bottlenecks caused by the ongoing geopolitical conflict. On a year-to-date basis, CTA/managed futures managers were up 9.43% over the first four months of 2022, with around a quarter of them generating a return more than 20%.

Eurekahedge Long Short Equities Hedge Fund Index down -2.13 in April

The Eurekahedge Long Short Equities Hedge Fund Index was down -2.13%, bringing its year-to-date return to -5.78% as of April 2022. The hawkish Federal Reserve, higher commodity prices and lockdowns in China have contributed to the weak performance of the global equity markets during the month. Around 34% of long/short equities hedge funds have maintained a positive performance in April, while 10% of them have generated a double-digit return in 2022.

Fund managers focusing on cryptocurrencies as represented by the Eurekahedge Crypto-Currency Hedge Fund Index declined 21.75% in April, bringing their year-to-date return to -28.23%. Similar with other risk asset classes, the magnitude of market breakdown has also impacted the cryptocurrency market. Bitcoin was down -18.01% in April, and as at the time of writing is currently trading below US$30,000, down from its all-time high of around US$65,000.