The Preqin All-Strategies Hedge Fund benchmark posted 2.82 per cent in March, the best monthly return for the asset class since January 2012 (+3.06 per cent), and only the third positive monthly return since May 2015.
All leading hedge fund strategies posted gains, with equity strategies seeing the highest returns of 3.79 per cent. However, after posting negative returns in the previous two months, performance for equity strategies funds in 2016 YTD stands at -1.10 per cent, the worst of any leading strategy. Overall, hedge funds are still showing negative performance for the year, with losses of 0.28 per cent in 2016 YTD.
Macro strategies continued their strong recent performance, as returns of 0.20 per cent took their 2016 YTD performance to 1.13 per cent; this is the highest YTD return for any leading strategy, and macro strategies funds are the only fund type to have posted positive monthly returns throughout the year. Another strategy posting positive returns for the opening quarter of 2016 is relative value funds, which gained 2.09 per cent in March to put their YTD performance at 0.46 per cent. Event driven strategies recorded just their second positive month in the last ten to return 2.55 per cent, while multi-strategy funds continued from gains of 0.21 per cent in February to post 0.77 per cent in March.
For the first time in 2016, discretionary hedge funds (+3.00 per cent) recorded better performance than systematic funds (+0.65 per cent). However, while systematic hedge funds are still returning a positive 0.18 per cent for the year-to-date, discretionary funds are posting losses of 1.21 per cent.
CTAs saw their first month of losses in 2016, returning -1.73 per cent. This cancels out most of their gains in February, when they returned 1.87 per cent; however, the strong start to the year for CTAs still puts their year-to-date performance at 1.03 per cent.
Liquid alternatives funds recovered in March as alternative mutual funds gained 2.78 per cent following four successive months of losses. After returning -2.63 per cent and -0.62 per cent in January and February, UCITS funds posted 1.74 per cent in March.
Activist hedge funds also posted their best monthly returns since January 2012 as their performance hit 3.75 per cent. Volatility funds, meanwhile, returned a second consecutive month of gains, adding 0.83 per cent to take their 2016 performance to 1.21 per cent at the end of the first quarter of the year.
Emerging markets hedge funds returned 5.85 per cent in March, wiping out earlier losses to bring their year-to-date performance to 2.71 per cent. While Asia-Pacific funds returned 5.17 per cent, and North America funds returned 3.25 per cent, Europe funds made gains of just 0.72 per cent in the month. “The opening months of 2016 seemed to pose the same challenges to the hedge fund industry as those that had characterised the second half of 2015; global volatility, losses in public equities, and a continued slump in commodities prices,” says Amy Bensted (pictured), head of hedge fund products at Preqin. “However, the widespread gains seen in March are an improvement for the industry, which has not seen such a strong monthly return since January 2012.
“Although nearly all strategies and geographies posted positive returns, there is a disparity in the strength of gains made between different types of hedge funds. For instance strong returns in emerging markets have been offset by more tepid European performance. Although the returns in March are encouraging, half the leading strategies are still showing negative YTD returns. The industry will need to show further recovery in the coming months to better the gains of 2015 and to win back investor favour.”
