The global hedge fund industry ended a volatile 2018 in the red, with aggregate performance for December at -2.15 per cent and for the year at -4.86 per cent, according to the latest eVestment hedge fund performance data.
December’s negative performance marked the industry’s fifth consecutive month of negative performance in 2018.
The industry’s aggregate negative performance for 2018 was nearly on par with the industry’s second worst year on record, 2011, when returns came in at -4.99 per cent. The hedge fund industry’s worst annual performance on record came in at -15.75 per cent back in 2008.
The 2018 performance is in stark contrast to the industry’s strong aggregate performance of +8.93 per cent in 2017 and almost universally positive performance among hedge fund markets, strategies and geographies in 2017. Additionally, according to Peter Laurelli, eVestment’s global head of research, the story in 2018 was very fund-specific, with some funds performing very well, while other funds faltered. This highlights the importance of doing deep research and due diligence in the hedge fund selection process.
Despite the aggregate negativity, there were pockets of good relative returns, notably from some larger products, particularly within the Macro universe, yet large funds were not void of highly negative results as well.
Origination & Financing hedge funds were the big winners in returns in 2018, with performance of +3.94 per cent.
Long/Short Equity and Activist strategies were hurt most by year-end market declines. Activist funds ended 2018 at -13.35 per cent, suffering the industry’s largest losses outside of emerging markets. Long/Short Equity funds ended 2018 at -6.85 per cent.
India and China-focussed products posted the largest aggregate losses for the year of all segments, coming in at -17.04 per cent and -16.84 per cent respectively.
