US stocks had their best month in decades in April and hedge funds sailed to a 5.46 per cent return, according to the Barclay Hedge Fund Index compiled by BarclayHedge. By comparison, the S&P 500 Total Return Index was up 12.8 per cent in April.Year-to-date, the hedge fund industry is down 7.01 per cent through April. The S&P 500 Total Return Index is down 9.29 per cent over the same time period.
All sectors but two tracked by the Barclay Hedge Fund Indices were in the black for April, the exceptions being the Volatility Trading Index, which was down 0.17 per cent, and the Emerging Markets MENA Index, which lost 2.00 per cent. Markets were able to shake off dismal news including rapidly mounting unemployment numbers, plummeting oil prices and shrinking economies.
“In spite of the worsening news in the coronavirus battle, massive government stimulus programs buoyed equity markets and provided a favourable tailwind for hedge funds,” says Sol Waksman, president of BarclayHedge.
As the world looked for solutions to a global healthcare crisis, the Healthcare & Biotechnology Index led the way in April with a 13.27 per cent return. After emerging market indices were battered in March, several emerging markets hedge fund sectors were also among April’s leading gainers. The Emerging Markets Global Equities Index returned 8.84 per cent on the month and the Emerging Markets Asian Equities Index gained 8.77 per cent.
Other leading April gainers included the Event Driven Index, gaining 8.02 per cent, the Equity Long Bias Index, up 7.73 per cent, and the Merger Arbitrage Index, returning 5.41 per cent.
Year-to-date, only four hedge fund sectors were in the black, led by the Volatility Trading Index which was up 7.28 per cent through the end of April. The Fixed Income Arbitrage Index posted a 2.14 per cent year-to-date return, the Option Strategies Index was up 1.35 per cent and the Healthcare & Biotechnology Index posted a 0.22 per cent year-to-date return.
Among sectors in the red for the year, the Emerging Markets Latin American Equities Index was off 23.96 per cent, the Pacific Rim Equities Index was down 16.71 per cent on the year, the Emerging Markets Global Equities Index dropped 16.38 per cent, and the Emerging Markets Eastern European Equities Index lost 14.99 per cent.