The hedge fund industry has posted average returns of -0.75 per cent for June, the first month this year of negative performance. Despite this, the benchmark has still returned 4.50 per cent year-to-date.
Single-manager hedge funds were not the only fund structures which fared poorly in June; UCITS posted returns of -1.76 per cent, and CTAs made losses of – 2.66 per cent, their worst monthly performance since July 2008. The only leading strategy with positive performance for the month was relative value, which posted a return of 0.17 per cent. Relative value strategy funds have seen only two months of negative performance in the past 18 months.
Both Asia-focused funds and Europe-focused funds saw negative performance of -1.82 per cent and -1.06 per cent respectively in June, in the wake of turbulence surrounding Chinese and Greek markets.
Despite their poor performance in the past month, Europe- and Asia-based funds accounted for more launches in Q2 (22 per cent and 9 per cent respectively) than in Q1, as North America-focused funds dropped to 67 per cent of the market total.
Discretionary CTAs posted returns of -0.53 per cent, compared to systematic CTAs which saw average returns of -3.56 per cent. Despite this, CTAs as a whole are still holding on to positive performance for the year with 0.11 per cent.
Funds of CTAs were hit especially badly with an average return of -6.95 per cent for June and currently stand at -5.10 per cent for 2015 YTD. Funds of hedge funds were down 1.22 per cent in June 2015, but are up 2.93 per cent for the year-to-date.
Alternative mutual funds have seen a notable decline in the proportion of fund launches they account for in the past six months. From a record high of 16 per cent of total hedge fund launches in Q4 2014, they now represent only 3 per cent of all launches in Q2 2015.
Credit strategies have fallen from 17 per cent of launches in Q1, to 9 per cent of launches in Q2, a figure similar to their market share in H2 2014. Conversely, relative value funds have more than doubled their proportion of launches to 12 per cent, up from 5 per cent in Q1.
“June has seen hedge funds post their first month of negative performance so far in 2015,” says Amy Bensted (pictured), head of hedge fund products at Preqin. “The industry has had a run of five months of positive returns from the start of 2015, and surpassed full-year 2014 performance in May. However various macroeconomic events, notably the Greece/Eurozone crisis and the turbulence experienced in the China stock market, has led to hedge funds failing to generate positive returns in June and has dented the year-to-date return of the sector. CTAs have also suffered further following their strong returns in Q1 2015; a difficult Q2 has left the strategy only just clinging on to positive performance through the first half of the year.”
