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Bigger is better in July, as larger hedge fund managers’ returns outweigh industry average

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The biggest hedge fund managers outflanked the wider industry in July, with larger managers edging into the black and the broader sector suffering its first down month since the start of 2021.

The biggest hedge fund managers outflanked the wider industry in July, with larger managers edging into the black and the broader sector suffering its first down month since the start of 2021.

The 10 largest hedge funds tracked by eVestment advanced 1.18 per cent last month, while aggregated performance for the industry was down slightly in comparison, sliding 0.32 per cent in July.

However, overall industry performance remains up 8.89 per cent since the start of the year, while the larger funds lag behind with a 5.81 per cent return over the same seven-month period. eVestment performance metrics show the 10 biggest hedge funds’ year-to-date performance is almost double that of their total annual return last year, which was 3.02 per cent.

Sectorally, the 10 largest equity long/short funds fared even better, scoring a 1.79 per cent July return, which puts them up 4.37 per cent YTD. Since the start of the year, the 10 largest managed futures funds have risen 10.26 per cent, aided by a 1.43 July gain.

Overall, more than half (51 per cent) of all hedge funds reporting to eVestment were in positive territory for the month.

“Looking at the groups of positive returns and negative returns, the issue in July wasn’t that losses were large during the month – the average loss of 2.51 per cent has been surpassed several times in the last year,” said Peter Laurelli, eVestment’s global head of research.

“Rather the average gain was very low at 1.77 per cent. That is the lowest average gain in over two years, since July 2019.”

Only managed futures strategies managed to generate a monthly return of more than 1 per cent, eVestment noted, which puts the sub-sector up 8.23 per cent since the start of January.

“The differing results between macro and managed futures strategies in July was remarkable given they tend to operate in generally similar markets in aggregate,” said Laurelli, noting macro funds’ 0.60 per cent July slide.

“The return differences in favour of managed futures funds was evident not only among the broad samples, but also within the 10 largest reporting products. For the year so far, the largest managed futures funds are outpacing the largest macro funds 10.26 per cent to +1.60 per cent, respectively.”

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