Alternative assets data specialist Preqin’s hedge fund benchmark declined by 7.95% during Q2, according to the firm’s Q2 2022 Hedge Funds Report, making it the second largest quarterly decline, post global financial crisis, and the sixth lowest quarterly return ever recorded by Preqin.
However, hedge funds’ performance over the past 12 months (-8.15%) is certainly better when compared with S&P 500’s return (-12.52%) during the same period. Dispersion in performance was significant among hedge fund top level strategies. Relative value and macro hedge funds protected investors during the quarter, declining -0.24% and -1.24%, respectively. Multi strategy (-4.87%) and credit (-4.53%) declined but given the level of volatility in the markets, these two categories performed reasonably well. Equity and event driven hedge funds disappointed investors the most, declining by 9.04% and 7.61%, respectively.
According to Preqin Pro, 79% of investors are intending to invest less than $50 million (the smallest allocation size) of fresh capital in hedge funds over the next 12 months, compared to 74% of investors in Q1 2022. 9% of allocators are planning to invest between $50 million- $99 million, 8% between $100 million-299 million, and 4% are aiming to put over $300 million to work over the next 12 months.
Equity strategies accounted for 54% of launches in the second quarter of 2022, unchanged from Q1. Niche strategies, including cryptocurrency hedge funds, accounted for a significantly smaller proportion (12%) of Q2 2022 launches, compared with the first quarter (22%). Conversely, credit strategies’ share increased from 5% in Q1 2022 to 12% in Q2.
Regional Performance: Performance was non-uniform across the regions. All regions finished the quarter in negative territory, with APAC-focused managers (-4.94%) declining less than their Europe-focused (-6.34%) counterparts and performing substantially better than North America-focused (-8.47%) managers.
