Eurekahedge reports that hedge funds started the year on a positive note, up 0.84 per cent during the month of January. Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) gained 1.49 per cent over the same period.
Among regional mandates, Latin American hedge fund managers topped the tables, gaining 3.47 per cent while event driven managers posted the best returns, up 1.95 per cent among strategic mandates. Financial markets were still hinged on the developments post-Trump win with US equity markets trading higher at the start of January on the back of encouraging US macro data.
The flow of economic data from major economies outside of the US has also signalled an encouraging outlook on the global economy. However, this still has to be taken with a pinch of salt as we are yet to see the full impact of Trump’s protectionist policies on America’s trade partners, Eurekahedge writes. While there are understandable jitters on an America First rhetoric, Trump could be treading political sensitivities too precariously.
The Eurekahedge 50 Index, an annually rebalanced index comprising of 50 elite hedge funds with strong risk-adjusted returns and combined AUM of almost USD150 billion has been rebalanced for annual year 2017. The Eurekahedge 50 Index was up 4.33 per cent in 2016, outperforming the average billion dollar hedge fund by almost 200 basis points during the year.
Key highlights of January 2017 include that over the past year, hedge funds were up 4.54 per cent with managers posting eight consecutive months of gains since February 2016. Close to one-quarter of hedge fund managers posted double digit returns for annual year 2016.
Eurekahedge writes that among developed mandates, North American hedge funds were up 1.05 per cent, followed by Japan and European mandated hedge funds which gained 0.75 per cent and 0.57 per cent respectively for January.
Over the past year, North American hedge funds managers topped 2016 returns among developed mandates (+7.74 per cent) while Europe and Japan managers posted modest gains. Among strategic mandates, event driven hedge funds posted the best January 2017 returns, gaining 1.95 per cent, followed by long/short equities and distressed debt hedge funds which were up 1.65 per cent and 1.52 per cent respectively.
Emerging market mandates were up 2.41 per cent for the month with strength led by underlying Latin America and Eastern Europe/Russia mandates. Frontier markets, as represented by the Eurekahedge Frontier Markets Hedge Fund Index was up 2.12 per cent for January.
The Eurekahedge CTA/Managed Futures Hedge Fund Index declined 0.65 per cent for the month with underlying trend-following hedge funds leading much of the weakness, down 1.17 per cent over the same period. Underlying FX-focused managers were down 0.49 per cent while their commodity-focused peers gained 1.03 per cent.
Asia ex-Japan hedge funds started 2017 on a positive note, up 1.79 per cent for the month with strength led by underlying Greater China focused funds which gained 2.16 per cent over the same period. India focused hedge funds were also positive with a 4.60 per cent increase during the month. Over the past year, Asia ex-Japan managers struggled to eke out gains and were up a marginal 0.08 per cent with performance dragged by Greater China focused funds which were down 4.09 per cent.
Among volatility-focused hedge funds, short volatility hedge funds posted the best performance for January, gaining 1.66 per cent, followed by relative value volatility hedge funds which gained 0.59 per cent over the same period. Over the past year, relative value volatility focused hedge funds posted the best gains, up 7.38 per cent followed by short volatility focused managers who were up 5.27 per cent.
