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Preqin Amy Bensted

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Hedge funds start 2017 with gains of 1.40 per cent

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Preqin’s All-Strategies Hedge Fund benchmark recorded gains of 1.40 per cent in January 2017, the highest January performance recorded since 2013 (+2.59 per cent). 

This also represents the highest performance month for the industry since April 2016, as funds built on gains of 1.07 per cent seen in December. 

All leading hedge fund strategies posted positive performance for the month, with equities strategies (+1.82 per cent) and event driven strategies (+1.70 per cent) funds leading the way. January’s positive returns put 12-month performance for the industry at 11.75 per cent, and funds have only recorded two months of losses out of the past 12. 

All regions saw positive performance through the month, but emerging markets funds (+3.45 per cent) recorded the greatest returns. European funds (+0.76 per cent) saw lower performance than either North America (+1.26 per cent) or Asia-Pacific (+1.79). 

Discretionary and systematic hedge funds recorded returns of 1.53 per cent and 1.03 per cent respectively in January. Over 12 months, discretionary funds have returned 12.72 per cent, compared to 6.62 per cent for systematic funds. 

Large hedge funds with USD1bn or more in assets recorded the greatest monthly gains of any size classification, at 1.38 per cent. By contrast, small hedge funds (USD100-499 million in AUM) saw the lowest returns of any size classification, making gains of 1.05 per cent. 

Funds of funds recorded modest gains in the month of 0.99 per cent, building on 0.79 per cent returns seen in December. Twelve-month net returns jumped to 3.89 per cent, as funds improved on 2.34 per cent losses recorded in January 2016. 

Alternative mutual funds posted returns of 0.96 per cent in January, while UCITS funds gained 0.93 per cent. Over the past 12 months, alternative mutual funds have returned 6.18 per cent, compared to 4.54 per cent for UCITS funds. 

In contrast to the wider hedge fund industry, CTA funds saw losses of 0.66 per cent through the month. 

Amy Bensted, Head of Hedge Fund Products, says: “Hedge funds have had a strong start to 2017, posting their best monthly returns since April, and their best January performance since 2013. In contrast, if we rewind the clock 12 months to January 2016, the industry recorded losses of 2.70 per cent. Given the consistent improved gains the industry recorded through much of the latter part of 2016, this now puts 12-month performance for the industry into double figures for the first time since August 2014. CTA funds, meanwhile, have slipped back into negative territory over the past 12 months. 

“The largest proportion of investors surveyed in December 2016 cited performance as the leading reason why they had redeemed hedge fund investments over 2016. Therefore, this improved performance of the industry as a whole could help to win over those investors that have become more cautious towards hedge funds.” 

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