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Hedge fund industry slips -2.66% in April, down -5.55% year to date

Friday, May 13, 2022
Opalesque Industry Update - The hedge fund industry gave up ground in April, down -2.66% for the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions.

For the year to date interval, the hedge fund industry remained underwater with a compounded return of -5.55% through April.

By way of comparison, the S&P 500 Total Return Index shed -8.72% in April. The absorption of the month's steep loss pushed the index further into the red, landing its year-to-date compounded return at -12.92%.

A sizable majority of hedge fund subsectors posted losses in April. The sectors that did post monthly gains were led by the Emerging Markets Eastern Europe Index which bounced +4.97%. Other notable sectors were represented by the Volatility Trading Index +1.33%, the Distressed Securities Index +1.05%, the Emerging Markets Eastern European Equities Index +0.86%, the Equity Market Neutral Index +0.78%, the Global Macro Index +0.74% and the Emerging Markets MENA Index up +0.46%.

Hedge fund subsectors suffering the most cutting losses in April were the Healthcare & Biotechnology Index off -7.16% and the Technology Index down -6.01%, but there was no shortage of pain to go around. Losses of -4% or greater dogged more than half-a-dozen industry sectors, including: The Emerging Markets Global Fixed Income Index (-5.88%), the Emerging Markets Latin American Equities Index (-5.52%), the Event Driven Index (-4.36%), the Equity Long Bias Index (-4.25%), the Balanced (Stocks & Bonds) Index (-4.19%).

April saw mostly a continuation of the unhappy trends established throughout Q1 2022. Correspondingly, 3 out of 4 hedge fund subsectors are carrying aggregate losses for the year-to-date interval ending April 30th. The sectors that have so far managed to avoid 2022's mire were led by the Global Macro Index which has posted a compounded return of +7.83%. The Emerging Markets MENA Index was the first runner up with +6.09% to-date performance. Other sectors in the black included: The Emerging Markets Latin American Equities Index (+4.35%), the Emerging Markets Latin America Index (+2.02%), the Equity Market Neutral Index (+1.65%), the Distressed Securities Index (+0.98%), the Emerging Markets Sub Saharan Africa Index (+0.26%), and the European Equities Index (+0.16%).

Subsectors reporting year-to-date losses were headlined (perhaps unsurprisingly) by sectors focused on Eastern Europe. The Emerging Markets Eastern European Equities Index and the Emerging Markets Eastern Europe Index were down -30.87% and -22.30% respectively. Technology-focused sectors are similarly downtrodden (if not as extremely). The Technology Index and the Healthcare & Biotechnology Index reported compounded returns of -16.55% and -14.96% respectively.

Following April, nearly 1/3 of the hedge fund subsectors were underwater by -10% or more. These include: The Emerging Markets Asian Equities Index (-12.81%), the Emerging Markets Global Fixed Income Index (-11.72%), the Emerging Markets Asia Index (-11.34%), the Emerging Markets Global Equities Index (-10.43%) and the Emerging Markets Global Index (-10.14%).

"Simply put, April was a tough month for most investors and asset managers," said Ben Crawford, Head of Research at BarclayHedge. "Most risk assets are in a bearish trend and there doesn't seem to be an abundance of safe harbors. One doesn't require a grand leap of imagination to see why. With investors worried about inflation, interest rate hikes and a slowing economy, the S&P 500 had its worst month since the start of the COVID-19 pandemic. U.S. inflation hit its highest level since 1981 in the first quarter, inflation in the UK hit a 30-year high in March and annual inflation hit record levels in April in the Eurozone."

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