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Hedge funds have positive January

Hedge funds navigated January well with positive returns from all four main strategies: equity hedge, relative value, event driven and global macro/CTA, according to HFRX strategy index returns.

The HFRX Global Hedge Fund index finished January up 2.0 per cent.
This positive performance came from many sources, as Anthony Lawler, portfolio manager at GAM, explains: "We are encouraged by the fact that return drivers were diverse in January – not just long equities. Several global macro managers held on to the short Japanese yen trade, and also profited from the sell-off in safe-haven rates. Relative value managers delivered strong performance from long residential mortgage positions and other credit longs even as safe-haven bonds sold off. Equity and event driven manager performed well, as we would expect in a month with strong equity market performance."
Signs indicate 2013 could provide good opportunities in active management and hedge fund strategies.

"We track cross asset class correlation as an indicator of whether markets are trading in a simple risk-on and risk-off pattern, or if markets are trading in a less correlated manner and focusing on fundamentals,” says Lawler. "GAM’s internal correlation indicator has come down in January, meaning that markets are less correlated, and the index is nearer to long-term averages. We see this as a positive indicator for fundamentals-focused portfolio managers, be they directional or relative value in style, for the year ahead."

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