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 BenchmarksFebYTD 201920182017
Hedge Fund Aggregate1.27%4.55%-5.05%8.94%
50% MSCI World/50% Citi WGBI1.04%5.68%-4.60%14.75%
S&P 5003.21%11.48%-4.38%21.83%
Primary MarketsFebYTD 201920182017
Equity1.85%6.81%-7.49%13.45%
Broad Capital Structure1.08%4.60%-3.47%8.90%
Fixed Income/Credit1.01%2.71%0.07%6.04%
Broad Financial Derivatives0.60%-0.09%-5.46%2.35%
Commodities0.51%2.60%-6.04%0.46%
Broad Multi-Market0.23%1.72%-3.87%4.58%
Volatility/Options Strategies0.19%1.32%-1.70%4.81%
FX/Currency-0.58%-0.20%0.86%-3.46%
Primary StrategyFebYTD 201920182017
Event Driven – Activist4.18%8.81%-10.91%11.13%
Convertible Arbitrage2.04%4.85%-2.21%5.71%
Long/Short Equity1.99%7.63%-6.99%12.13%
Quantitative Directional Equity1.09%2.92%-4.64%10.45%
Event Driven1.05%3.59%-1.95%7.44%
Relative Value Credit1.04%2.35%-0.63%5.48%
Origination & Financing0.95%2.24%4.80%6.69%
Directional Credit0.88%2.38%0.74%5.32%
Multi-Strategy Credit0.81%2.13%0.01%5.70%
Managed Futures0.78%0.13%-6.09%2.76%
Multi-Strategy0.75%3.04%-3.32%6.84%
Distressed0.47%3.12%-0.28%6.64%
Macro0.13%1.01%-2.87%4.05%
Market Neutral Equity-0.39%0.71%-3.07%3.58%
Prominent Universes by SizeFebYTD 201920182017
Ten Largest Hedge Funds0.18%0.97%0.35%5.75%
Ten Largest Managed Futures0.49%-1.74%-6.68%4.00%
Ten Largest Long/Short Equity0.30%2.72%-4.54%9.50%
Ten Largest Macro-0.30%0.47%2.13%2.24%
Economic DevelopmentFebYTD 201920182017
Emerging Markets1.76%6.09%-10.83%19.54%
Country/Regional ExposureFebYTD 201920182017
China7.17%14.17%-16.63%34.74%
Asia ex-Japan2.37%5.55%-11.27%21.76%
Japan0.75%2.71%-8.02%13.77%
Developed Europe0.57%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%