Hedge funds are heading for one of their worst years of performance on record, with many managers having failed to protect investors from sharp falls in equity and bond markets, according to a report by The Financial Times.
According to data from HFR, hedge funds were down 5.6 per cent on average in the first six months of 2022, leaving the industry on track for its second-worst year of returns since 1990 – when HFR began recording performance – second only to the losses seen during the global financial crisis of 2008.
Long-short equity funds, which manage around $1.2 trillion in assets, have been hit particularly hard dropping 12 per cent on average in the first half of the year, according to HFR. An estimated gain of only 1 per cent in July significantly lags last month’s 7 per cent rebound in global equities.
‘Tiger cub’ Lee Ainslie’s Maverick Capital, which made double-digit gains in each of the past three years, was down 35 per cent in the first six months of the year while fellow cub Glen Kacher’s Light Street was down more than 40 per cent, and Daniel Loeb’s Third Point lost around 20 per cent in the first half of the year. Skye Global meanwhile, which set up by former Third Point analyst Jamie Sterne, was down more than 35 per cent in the first half of the year after losing 10.4 per cent in June.
Not all funds have suffered though with some managers, including Brevan Howard, with its focus on government bonds and currencies, oil traders like Pierre Andurand, and quant funds betting on market trends making big gains this year and helping to keep average hedge fund returns well ahead of equity markets.
