Hedge funds posted gains in April as managers navigated the banking turmoil and volatility that accelerated throughout the month and extended into May with the closure and distressed acquisition of First Republic Bank, according to HFR.
Hedge funds posted gains in April as managers navigated the banking turmoil and volatility that accelerated throughout the month and extended into May with the closure and distressed acquisition of First Republic Bank, according to HFR.
The HFRI 500 Fund Weighted Composite Index was up an estimated +0.4% for the month with performance gains led by Macro strategies. The HFRI Fund Weighted Composite Index (FWC) also gained an estimated +0.4% for the month, led by Macro and Equity strategies.
Performance dispersion narrowed in April, as the top decile of the HFRI FWC constituents advanced by an average of +5.5%, while the bottom decile fell by an average of -4.4%, representing a top/bottom dispersion of only 9.9% for the month. By comparison, the dispersion in March performance was 18.3%. Nearly half of hedge funds posted positive performance in April.
Uncorrelated Macro was the top-performing strategy for the month, led by fundamental, discretionary Macro strategies and complemented by quantitative, trend-following CTA strategies. The investible HFRI 500 Macro Index gained +1.2% for the month, while the investable HFRI 400 (US) Macro Index advanced +0.7% (estimated). The HFRI 500 Trend Following Index jumped +1.6% in April, while the HFRI 500 Macro: Discretionary Thematic Index added +0.3%.
Equity Hedge funds, which invest long and short across specialised sub-strategies, also gained in April, driven by Healthcare and Energy sub-strategies, as volatility surged across the financial sector. The HFRI Equity Hedge (Total) Index advanced an estimated +0.4%, while the investable HFRI 400 (US) Equity Hedge Index added +0.1% in April. EH sub-strategy gains were led by the HFRI EH: Healthcare Index, which surged +3.9% for the month, while the HFRI EH: Energy/Basic Materials Index added +1.5%. In the first four (4) months of the year, the HFRI 500 Equity Hedge Index has gained +2.3% to lead all primary strategy areas.
Event-Driven strategies, which often focus on out-of-favor, deep value equity exposures and speculation on M&A situations, also advanced in April as risk in Financials accelerated; the investable HFRI 400 Event-Driven Index gained +0.2% (estimated), while the HFRI Event-Driven (Total) Index also added an estimated +0.2%. ED sub-strategy performance was led by the HFRI ED: Special Situations Index, which gained an estimated +1.2%, while the HFRI ED: Credit Arbitrage Index added +0.5%.
Fixed income-based, interest rate-sensitive strategies posted gains in April, as the Federal Reserve prepared to raise interest rates and regional bank risk accelerated; the HFRI 500 Relative Value Index gained an estimated +0.1% for the month, while the HFRI Relative Value (Total) Index advanced +0.25% (estimated). Leading sub-strategy performance, the HFRI RV: Yield Alternatives Index advanced +1.4% in April, while the HFRI RV: Fixed Income-Asset Backed Index added +0.8%.
Liquid Alternative UCITS strategies also gained in April, with the HFRX Global Index returning +0.34%, while the HFRX Market Directional Index added +0.71%. HFRX sub-strategy performance was led by the HFRX Macro Index, which gained +1.36%, and the HFRX Equity Hedge Index, which added +0.61% for the month. The HFRI Diversity Index advanced an estimated +0.3% in April, while the HFRI Women Index declined -1.3%.
