Sign up for free newsletter


Hedge funds see positive performance in April

Hedge funds see positive performance in April

Hedge fund performance was broadly positive in April, with the HFRX Global Hedge Fund index returning 0.4 per cent on the month and each of the four HFRX main hedge fund strategy indices recording positive performance. 

GAM portfolio manager Anthony Lawler (pictured), says: “Dampened volatility allowed managers to hold positions and eke out positive returns. The largest beneficiaries were more directional strategies as stability in the macro environment drove gains, but positioning remained light and trends are not being chased aggressively.”
In the global macro space, the month was broadly positive for discretionary managers although tougher in the systematic space. Lawler says: “Discretionary managers were able to benefit as supportive themes played out, including a continued rebound in emerging markets. Argentina returning to the capital markets, a commodity bounce and pickup in inflation positions through TIPS were all common sources of gains. However, the month was tougher for systematic strategies as certain longer-term trends continued to reverse causing negative returns for the month from positioning including specific long fixed income exposures and broader short commodities exposure.”
Event driven and equity long/short strategies produced small gains for the month. Lawler says that “although there was a high level of activity in the event space, with a number of large deal announcements, earnings results and the derailment of the Allergan/Pfizer deal due to regulatory pressure, fund returns were positive but muted given that exposure levels remain low after the changes of position crowding and related selloffs in 2015 and January. Positive performance for event driven traders was partly driven by distressed and deep-value holdings that were supported by rising credit and commodity prices.” 

“Equity long/short was modestly positive with regional variations as macro forces were influential,” says Lawler. “But a positive indicator is that we saw an increase in sector and single-name dispersion, which should prove beneficial for stock selection, especially during earnings season as already downwardly revised estimates are being tested.”
Relative value had a strong month as investors returned to credit and yield seeking. Lawler says that: “Reflating commodity prices and supportive technicals led to a sharp rally in the HY credit space. Managers modestly benefited from this, given materials and energy-related names have been under owned by active investors. More broadly, relative value benefited from a supportive risk environment.”
April was a constructive month for hedge fund performance, but the environment remains one where volatility could spike, says Lawler: “the market perception that the Fed has eased the pace of hikes has provided a period of relative calm. However, we believe that this current environment could be fleeting as the underlying global macro and growth fundamentals remains fragile. We view positioning for further volatility and potential growth disappointments to be a sensible proposition. We remain convinced of the investment case for lowly geared relative value strategies in this environment, together with certain systematic strategies and longer-term discretionary macro managers, all of which contribute to diversification from traditional assets that continue to look fully priced.”

5 days 5 hours from now - Abuja
1 week 5 days from now - London
2 weeks 3 days from now - London
2 weeks 3 days from now - San Francisco
Mon, 15/05/2017   - London
Mon, 15/05/2017   - London
Mon, 15/05/2017   - London
IKONIC Fund Services Ltd.
Tue, 29/11/2016 - 12:28
Backstop Solutions Group
Tue, 08/11/2016 - 18:44
The Gemini Companies
Mon, 17/10/2016 - 12:51
other gfm publications