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On a performance measure, hedge fund returns continue to be mixed. While some fund strategies have experienced a challenging start to the year, others have thrived with performance dispersion across the industry becoming even more pronounced.

Upon closer examination of the hedge fund strategies that we polled, CTA and global macro reported the highest confidence scores. The past quarter has seen news of some notable gains made by hedge funds for their investors across both of these strategies. In comparison, crypto hedge funds scored the lowest on confidence, not too surprising, given the difficult conditions being reported across the asset class this year.

Regulatory and compliance headwinds across the industry continue to intensify. The US in particular has witnessed an unprecedented inflow of new industry proposals which, if enacted, would make managing business extremely challenging and expensive for private funds. Not a week seems to go by without another proposal being put forward by the SEC, amidst the most serious overhaul of existing market practices for the private funds industry. European and APAC funds are also having to consider a raft of new industry regulations being discussed which would impact how funds manage their business.

Despite all of these challenges and the threat of more still to come, hedge fund managers globally remain cautiously optimistic about their economic prospects for the coming 12 months. In the wake of global financial markets experiencing sharp corrections and higher expected volatility, hedge funds are reinforcing their value proposition in best managing downside risk and offering financial security to investors.

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The AIMA Hedge Fund Confidence Index (HFCI) is a new global index that measures the level of confidence hedge funds have in the economic prospects of their business over the next 12 months. A product of AIMA, Simmons & Simmons, and Seward & Kissel, the HFCI is calculated during the final two weeks of each quarter and published at the start of the subsequent quarter.

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