The Preqin All-Strategies Hedge Fund benchmark saw returns of 0.97 per cent in August, down from gains of 2.23 per cent in July.
This takes overall industry performance in 2016 YTD to 4.67 per cent and 12-month performance to 4.86 per cent.
August also represents the sixth consecutive month of positive performance for hedge funds, the longest period of monthly gains seen since the industry recorded 12 consecutive months of gains in June 2012 to May 2013.
All leading strategies recorded positive performance; equity strategies were again the best-performing leading strategy, returning 1.31 per cent for the month, while event driven and credit funds returned 1.10 per cent and 0.91 per cent respectively.
All geographic regions also showed positive returns for the month. Developed and emerging markets both made significant gains, of 1.69 per cent and 1.89 per cent respectively. Emerging market funds are now showing returns of 8.44 per cent in 2016 so far, and 10.12 per cent over the past 12 months, the highest of any region.
Funds in North America (+1.55 per cent) saw greater gains than those in either Europe (+0.36 per cent) or Asia (+0.55 per cent) through the month. North America funds are now showing YTD performance of 6.27 per cent, compared to 1.12 per cent for Asia funds, and -0.38 per cent for Europe funds.
Discretionary funds returned 1.31 per cent in August, while systematic funds saw losses of 0.74 per cent, their first month of negative returns since January. Despite this, over the past 12 months systematic funds (+4.49 per cent) still outperform discretionary funds (+3.97 per cent).
Preqin’s most recent survey of hedge fund investors found that 100 per cent of them stated their activist fund commitments had not met expectations in H1 2016. However, activist funds returned 1.52 per cent in August, and are now showing gains of 5.82 per cent in 2016 so far.
Having seen year-to-date gains of 3.27 per cent as of the end of July, CTA funds saw losses of 2.62 per cent in August, taking their overall performance in 2016 YTD to 0.58 per cent. This represents the lowest monthly performance for CTAs since July 2008, when they recorded losses of 2.85 per cent.
Funds of hedge funds followed gains of 1.32 per cent in July with returns of 1.92 per cent in August. This represents the first time FoHFs have recorded two consecutive months of positive performance since November 2015, although they are still showing year-to-date losses of 0.08 per cent.
Alternative mutual funds saw losses of 0.57 per cent in August, while UCITS funds made gains of 0.40 per cent. Over the past 12 months, however, their performance has been similar, with alternative mutual funds returning 0.05 per cent, and UCITS funds breaking even at 0.00 per cent.
“Preqin’s recent survey of hedge fund investors showed that as a group they were not satisfied with the performance of the hedge fund industry over the past 12 months: almost four out of five stated that their hedge fund investments had not met their performance expectations,” says Amy Bensted (pictured), head of hedge fund products at Preqin. “However, as of the end of August the hedge fund industry has now recorded six consecutive months of gains, and all leading strategies are showing gains in 2016 so far.
“That said, August represents another month of industry gains of less than 1.00 per cent. In fact, of the past six months, three have seen returns below this threshold, which may be a factor in some investors’ dissatisfaction. However, some strategies and geographies are now showing significant gains through the year so far, with emerging markets funds and event driven strategies in particular showing strong returns. If these funds can maintain this level of performance going into the last quarter of the year, we may see investors turn increasingly to them.”