Long/short hedge funds are the top performing strategy in the first quarter of 2013, with cumulative net returns of 4.43 per cent, according to Preqin.
Preqin’s April edition of Hedge Fund Spotlight reveals that long/short hedge funds outperformed all other strategies in Q1 2013. Long/short equity is also the most commonly sought-after single strategy by institutional investors, with 43 per cent of investors that are planning on making new allocations to hedge funds in the next 12 months favouring this strategy.
Macro strategies hedge funds posted returns of only 1.17 per cent in Q1 2013, and fund launches for this type decreased from 32 per cent of all hedge funds in Q4 2012 to 14 per cent in Q1 2013. However, investor appetite for macro funds is at its highest level since Q2 2012, with 29 per cent of investors indicating that they are seeking macro hedge funds, compared to 37 per cent of investors in Q2 2012.
Long/short equity funds account for 58 per cent of all hedge fund launches in Q1 2013, significantly higher than the 36 per cent of hedge fund launches which were represented by the long/short strategy in Q1 2012.
CTAs were the worst performing hedge funds in Q1 2013, with net returns of 0.21 per cent; investor appetite for this strategy has fallen from 25 per cent of searches issued in Q2 2012 to 17 per cent in Q1 2013.
Event driven strategies posted the highest rate of cumulative returns over the last 12 months, at 9.44 per cent. Funds focusing on event driven strategies represent 11 per cent of hedge funds launched in Q1 2013, compared to one per cent in Q4 2012.
However, investor appetite for the relatively illiquid event driven strategies funds has declined, with 18 per cent of investors that initiated a mandate in Q1 2013 targeting this strategy, compared to 27 per cent of investors in Q2 2012.
Some 28 per cent of funds launched in Q1 are managed by first-time fund managers.
Investors show increased appetite for alternatives to the traditional commingled offshore products, with 14 per cent of investor searches including a UCITS-compliant hedge fund component, compared to seven per cent in 2012.
North America-based fund managers account for 81 per cent of all launches in the quarter.
European launches represent just 12 per cent of new hedge funds, possibly as managers wait to launch until after the July AIFMD deadline.
Funds of hedge funds posted 3.16 per cent in Q1 2013, representing the highest net quarterly return for these vehicles since Q1 2012. Single-manager hedge funds posted 3.35 per cent in Q1 2013.