Hedge fund returns were divided in May with overall industry performance slightly negative at -0.09 per cent, bringing overall YTD returns to +0.75 per cent. Commodity hedge funds, the surprise performance leaders of the industry so far in 2016, produced negative aggregate returns in May, declining -0.46 per cent, halting a three-month run when the universe returned 6.99 percent, according to eVestment.
Despite being flat in aggregate, there is good news for investors in the multi-strategy fund universe. Much had been made of losses within some of the industry’s largest multi-strategy funds early in 2016, however the >USD1 billion AUM multi-strategy fund universe has risen in each of the last three months and is positive for the year.
While there were pockets of positive returns in managed futures, 70 per cent of managed futures hedge funds declined in May. The universe was a big drag on overall industry returns during the month.
Hedge funds investing in India have produced uninspiring results since their massive 50+ per cent gains in 2014. In May India-focused funds returned 2.00 per cent, with YTD returns of -1.79 per cent.
China funds have seen redemption pressures rise and recent returns have not done much to assuage the current negative investor sentiment. The decline in May was the universe's fourth in 2016.
Hedge funds focused on energy equities continued to rebound in-line with the price of oil in May. Average gains of +1.77 per cent bring YTD returns to +4.48 per cent after losses of -11.36 per cent in 2015.
Healthcare-focused strategies also benefited for a second consecutive month as valuations in the sector continued to climb in May. However the group remains the worst performing equity sector of focus for hedge funds in 2016.