Investors pulled USD20.7 billion from hedge funds last month – one of the largest drawdowns in years – but hedge funds saw a performance rebound in July, with aggregate performance hitting 1.89 per cent in July and 3.29 per cent year-to-date.
That’s according to the July 2016 eVestment Hedge Fund Performance Report. Of particular note, according to the report, was performance of event driven, activist and distressed funds, as well as funds focused on Brazil and China.
According to author Peter Laurelli (pictured), eVestment’s vice president and global head of research, in 2016 event driven funds have had more money removed than any strategy following less than stellar returns in 2015. But for investors who remained, or those who focused on smaller managers, 2016 has been a much better year, with the broad event driven universe gaining an average of 1.96 per cent in July and 3.84 per cent YTD. Funds with under USD1 billion in AUM are up 4.57 per cent YTD.
Activist managers, a subset of event driven, have generally done very well this year, despite select high profile outliers. Activist strategies were up 3.82 per cent in July and with YTD returns averaging 5.04 per cent, are among industry leaders in 2016.
In addition, distressed hedge funds produced another strong month in July, returning 2.89 per cent, which brings YTD returns to 6.26 per cent, the highest among any primary strategy.
As athletes and spectators enjoy the Rio Olympics, Brazil-focused hedge fund managers are likely also celebrating as they are on pace for their best year since 1999, with July returns at 4.93 per cent and YTD returns at 30.61 per cent. Gains thus far from 2016 have a long way to go to recapture losses from the prior three years, however.
China funds, which are still experiencing redemption pressures, albeit to a lesser degree each of the last three months, experienced a much needed rebound in July, returning 3.10 per cent.
Overall, hedge funds produced their most broadly positive month since February 2014 in July, with 79 per cent of all funds posting gains. Several strategies had zero constituents declining during the month, and only one segment had fewer than half of its funds produce gains.
