The hedge fund industry tracked the fates of other markets and broader economies roiled by the novel coronavirus pandemic in March, posting an 8.03 per cent loss for the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions. The hedge fund industry fared much better than the S&P Total Return Index which was down 16.2 per cent for the month.
Year-to-date, the hedge fund industry was down 10.83 per cent through the end of March. The S&P 500 Total Return Index was down 19.6 per cent over the same time period.
All but four hedge fund sectors were in the red for March, as government-imposed shutdowns, stay-at-home orders and frightened consumers slammed the brakes on business activity around the world.
“March was Wall Street’s worst month since 2008, and the first quarter was the Dow’s worst first quarter ever,” says Sol Waksman, president of BarclayHedge. “While markets tried to rally at times on hopes of government stimulus, overall, the uncertainty, economic disruptions and fears surrounding the coronavirus proved too powerful a foe.”
Not surprisingly, among the four sectors in the black in March the leading gainer was the Volatility Trading Index, up 19.25 per cent for the month. The Option Strategies Index gained 7.36 per cent, the Equity Market Neutral Index up 0.65 per cent and the Emerging Markets Global Fixed Income Index was flat in March.
Emerging markets were hit especially hard. Among the sectors posting the largest losses in March were the Emerging Markets Latin American Equities Index, down 22.44 per cent for the month, the Emerging Markets Global Equities Index, which lost 18.54 per cent, the Emerging Markets Latin America Index, down 18.32 per cent, the Emerging Markets Asian Equities Index, off 13.49 per cent, the Event Driven Index, losing 12.27 per cent, and the Emerging Markets MENA Index, down 11.25 per cent.
Year-to-date, the Volatility Trading Index and Option Strategies Index stood alone in the black, respectively gaining 19.17 per cent and 3.76 per cent through the end of March. The remaining sectors all posted year-to-date losses. The Emerging Markets Latin American Equities Index was down 28.55 per cent year-to-date, the Emerging Markets Global Equities Index was off 25.38 per cent, the Emerging Markets Latin America Index lost 24.22 per cent, the Emerging Markets Asian Equities Index was down 15.81 per cent, and the Emerging Markets MENA Index lost 15.65 per cent.
“The coronavirus has hit emerging markets even harder than other economies as prices for oil and other commodities have plummeted and investors looked to unload what they perceived to be riskier investments,” says Waksman.
