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Hedge funds back in the black despite losses for emerging markets focused funds

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Hedge funds successfully traded their way around an overwhelming month in April and were up 0.56 per cent, while underlying markets as represented by the MSCI World Index gained 1.18 per cent during the month.

That’s according to the Eurekahedge May Index Flash Update which says that Investors’ risk appetite improved in April amid waning concerns over a trade war, bolstered by the ‘soft’ tone of Xi Jinping in response to US trade sanctions.
 
Developed markets outperformed their emerging market counterparts during the month, as the latter still remained rather volatile with the region’s equity markets posting a slightly negative return during the month on the back of a strengthening US dollar and concerns over US-China trade spat. Equity markets rebounded in April with strength led by European and North American markets with mixed to flat performance across Asian equity markets. Economic data for Q1 2018 was largely encouraging albeit recovery was at a slower pace with indicators pointing towards global economic expansion.
 
Meanwhile 60 per cent of the underlying constituent funds for the Eurekahedge Hedge Fund Index were in positive territory during the month, with nearly 4 per cent of them reporting gains in excess of 5 per cent. European hedge funds led performance among regional mandates this month, up 1.14 per cent while distressed debt managers topped the table across strategies, gaining 1.24 per cent over the same period.
 
On a year-to-date basis, hedge funds were up 0.24 per cent while underlying markets declined 1.08 per cent. Eastern Europe & Russia hedge fund managers led the table on a year-to-date basis, up 5.41 per cent followed by their Latin American and emerging markets counterparts with gains of 4.27 per cent and 1.45 per cent respectively.
 
On a year-to-date basis, hedge fund managers gained 0.24 per cent with 10 per cent of them posting returns in excess of 5 per cent.
 
European hedge fund managers led the performance among developed mandates, gaining 1.14 per cent during the month followed by North American hedge funds which were up 0.27 per cent while Japanese hedge funds languished, down 0.63 per cent over the same period. On a year-to-date basis, European hedge fund managers were up 0.85 per cent beating their North American and Japanese counterparts who lost 0.71 per cent and 2.20 per cent respectively.
 
All strategic mandates were up this month with the Eurekahedge Distressed Debt Hedge Fund Index posting the best returns, up 1.24 per cent during the month – the only strategy to post four consecutive month of gains since the start of the year. Managers also posted impressive April 2018 year-to-date gains, up 4.15 per cent – the best April year-to-date returns for the strategy since 2013.
 
CTA/managed futures hedge fund managers gained 0.25 per cent in April with underlying commodity focused hedge funds gaining 1.60 per cent during the month. On a year-to-date basis, CTA/managed futures hedge fund managers declined 1.50 per cent with trend following-focused hedge funds retracting 3.19 per cent while commodity focused funds are up 0.74 per cent.
 
Asian hedge funds posted their third consecutive month of losses in April, down 0.27 per cent. On a year-to-date basis, Asian managers are down 0.19 per cent, with weaknesses led by Japan and India mandated hedge funds losing 2.20 per cent and 2.02 per cent respectively.
 
The Eurekahedge Crypto-Currency Hedge Fund Index rebounded to positive territory in April with gains of 83.86 per cent, while its 2018 year-to-date figure is still in the red, down 1.22 per cent. In contrast, bitcoin has lost over 33 per cent over the same year-to-date period.

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