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Amy Bensted, Preqin

Hedge funds post gains of 3.18 per cent in Q1 2017


The hedge fund industry continued its positive start to the year with another month of gains in March with the Preqin All-Strategies Hedge Fund benchmark recording returns of 0.68 per cent through the month, building on gains of 1.01 per cent and 1.46 per cent in February and January, respectively. 

Q1 2017 performance now stands at 3.18 per cent, which marks the best opening quarter performance since 2013, as hedge funds sustained their recent strong performance. With just one month of losses recorded since February 2016, the industry has now returned 11.61 per cent over a 12-month period. 

Event driven and equity strategies posted Q1 returns of 4.18 per cent and 4.06 respectively, the highest of any leading strategy. 

All leading strategies delivered gains through the quarter, but relative value strategies posted the lowest returns in Q1 of 1.06 per cent, after the strategy also recorded the smallest gains in 2016. 

CTAs have experienced mixed performance of late after a troubled year in 2016, and losses of 0.18 per cent in March contributed to Q1 returns of -0.36 per cent. 

Activist hedge funds continue to deliver robust returns with Q1 gains of 3.30 per cent, while volatility funds are also delivering in a climate of uncertainty and recorded Q1 performance of 3.32 per cent. 

Despite suffering losses of 0.35 per cent in 2016, funds of hedge funds rebounded in the opening quarter to post gains of 2.20 per cent. 

Hedge funds larger than USD1bn posted the highest gains of any size classification in Q1 (+3.98 per cent), although emerging- (+3.27 per cent), small- (+2.55 per cent) and medium-sized (+2.91 per cent) hedge funds all recorded positive performance. 

Asia-Pacific-focused funds gained 4.82 per cent in Q1 2017 and emerging markets-focused hedge funds returned 3.82 per cent. 

Amy Bensted (pictured), Head of Hedge Fund Products, says: “Performance concerns within the hedge fund industry and anxieties surrounding wider economic uncertainty have troubled investors in the asset class over the past year. However, hedge fund managers have delivered strong returns over this period, posting gains in 11 of the past 12 months and recording their strongest opening quarter to a year since 2013. 

“Hedge funds across all leading strategies, geographies and size classifications have shared in this positive start to 2017; this strong performance across the board is crucial at a time when investor scrutiny is intense. The key to attracting investor capital back into the industry over the remaining three quarters in the year is likely to be maintaining these returns and dealing with concerns over fees, but hedge fund managers will now be able to point to the strength of recent performance as an incentive for investors.” 
 

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