Preqin’s Hedge Funds Q3 2023 report finds that in terms of performance, Preqin’s total hedge fund index ended Q3 2023 at –0.12 per cent.
The firm writes that a strong July eroded in the following two months as public markets moved lower. According to Preqin analysts, flat performance resulted in little change in the year-to-date index return from the end of June, up 6.03 per cent year-to-date (YTD) at the end of Q3 2023, compared to 6.01 per cent YTD at the end of Q2 2023.
Strategy: Equity-focused strategies led hedge fund sub-strategies in Q2 2023 and H1 overall in 2023. The Preqin total hedge fund index outperformed the S&P 500 PR index by 3.5 per cent over Q3 2023, catching only 3.3 per cent of the loses in the same period.
Fund launches: Fund activity shows niche strategies saw an uptick in launches relative to other strategies in Q3 2023. Preqin data shows that 20 per cent of all fund launches were focused on the niche market segments. These are made up primarily of cryptocurrency-trading funds and those that invest in insurance-linked securities, which were among the most searched for strategies by investors during Q3 2023.
Charles McGrath, AVP Research Insights at Preqin, says: “It is clear that hedge funds are a key asset class to mute market volatility. Recent Preqin survey data shows that investors have highlighted markets uncertainty, along with shifting inflation and interest rates, as potential challenges. When citing these concerns, the same group pointed to hedge funds’ role in portfolios to guard against volatility.”
“From our latest third quarter data, Preqin sees lower than market risk, or low-beta, strategies continuing to attract capital. Key examples are global macro, relative value and to some extent niche strategies. This comes as investors are clearly focusing more on using hedge funds as low market correlation options.”