Hedge Funds Continue Performance Comeback from 2018

11 Mar

Hedge Funds Continue Performance Comeback from 2018

Hedge funds returned an average of +1.27% in February, according to the just-released eVestment February 2019 hedge fund performance data, building on a strong January to bring year-to-date (YTD) performance to +4.55%. The contrast to 2018’s average industry performance of -5.05% is stark and demonstrates the industry’s effort to shake off last year’s challenges. The first two months of 2019 offered up the industry’s best returns to start a year since 2012, when average returns were at +5.78% through February of that year.

The big winners for the month were China-focused hedge funds, returning an average of +7.17% in February, bringing YTD 2019 returns to +14.17%, compared to -16.63% returns for China-focused funds in 2018. The biggest losers for the month were Brazil-focused funds, returning an average of -3.08% in February. YTD returns for Brazil-focused funds are still in the green however, at +5.03%.

Other interesting points from the latest data include:

  • Equity strategies continue be leaders in the industry, rebounding off their industry lagging returns from 2018. Activist funds for instance, which tend to have concentrated equity exposures, posted strong gains in February at +4.18% and are at +8.81% YTD.
  • Among primary strategies, Market Neutral Equity funds were the only primary strategy to produce aggregate negative returns in an otherwise positive equity market environment. Only 43% of market neutral managers were able to produce gains during the month, causing average returns to come in at -0.39% in February.
  • Macro hedge fund returns also lagged in February. Only 49% of funds were able to produce positive results, but the average positive return outweighed the average negative (+1.67% vs. -1.23%), allowing returns to squeak into positive territory at +0.13%. Size was not an advantage for Macro funds in February, with the 10 largest Macro funds returning -0.30% in February.

The full February 2019 data is below. Please visit eVestment’s Research Reports page to see all of the free data eVestment offers.

Industry Benchmarks Feb YTD 2019 2018 2017
Hedge Fund Aggregate 1.27% 4.55% -5.05% 8.94%
50% MSCI World/50% Citi WGBI 1.04% 5.68% -4.60% 14.75%
S&P 500 3.21% 11.48% -4.38% 21.83%
Primary Markets Feb YTD 2019 2018 2017
Equity 1.85% 6.81% -7.49% 13.45%
Broad Capital Structure 1.08% 4.60% -3.47% 8.90%
Fixed Income/Credit 1.01% 2.71% 0.07% 6.04%
Broad Financial Derivatives 0.60% -0.09% -5.46% 2.35%
Commodities 0.51% 2.60% -6.04% 0.46%
Broad Multi-Market 0.23% 1.72% -3.87% 4.58%
Volatility/Options Strategies 0.19% 1.32% -1.70% 4.81%
FX/Currency -0.58% -0.20% 0.86% -3.46%
Primary Strategy Feb YTD 2019 2018 2017
Event Driven – Activist 4.18% 8.81% -10.91% 11.13%
Convertible Arbitrage 2.04% 4.85% -2.21% 5.71%
Long/Short Equity 1.99% 7.63% -6.99% 12.13%
Quantitative Directional Equity 1.09% 2.92% -4.64% 10.45%
Event Driven 1.05% 3.59% -1.95% 7.44%
Relative Value Credit 1.04% 2.35% -0.63% 5.48%
Origination & Financing 0.95% 2.24% 4.80% 6.69%
Directional Credit 0.88% 2.38% 0.74% 5.32%
Multi-Strategy Credit 0.81% 2.13% 0.01% 5.70%
Managed Futures 0.78% 0.13% -6.09% 2.76%
Multi-Strategy 0.75% 3.04% -3.32% 6.84%
Distressed 0.47% 3.12% -0.28% 6.64%
Macro 0.13% 1.01% -2.87% 4.05%
Market Neutral Equity -0.39% 0.71% -3.07% 3.58%
Prominent Universes by Size Feb YTD 2019 2018 2017
Ten Largest Hedge Funds 0.18% 0.97% 0.35% 5.75%
Ten Largest Managed Futures 0.49% -1.74% -6.68% 4.00%
Ten Largest Long/Short Equity 0.30% 2.72% -4.54% 9.50%
Ten Largest Macro -0.30% 0.47% 2.13% 2.24%
Economic Development Feb YTD 2019 2018 2017
Emerging Markets 1.76% 6.09% -10.83% 19.54%
Country/Regional Exposure Feb YTD 2019 2018 2017
China 7.17% 14.17% -16.63% 34.74%
Asia ex-Japan 2.37% 5.55% -11.27% 21.76%
Japan 0.75% 2.71% -8.02% 13.77%
Developed Europe 0.57% 2.42% -3.29% 8.74%
India -0.01% -4.61% -16.31% 32.87%
Russia -0.21% 7.19% -13.20% 13.16%
Brazil -3.08% 5.03% -2.26% 15.13%