Hedge funds returned an average of +1.27 per cent in February, according to the just-released eVestment February 2019 hedge fund return data, building on a strong January to bring year-to-date (YTD) performance to +4.55 per cent.
The contrast to 2018’s average industry performance of -5.05 per cent is stark and demonstrates the industry’s effort to shake off last year’s challenges. The first two months of 2019 offered up the industry’s best returns to start a year since 2012, when average returns were at +5.78 per cent through February of that year.
The big winners for the month were China-focused hedge funds, returning an average of +7.17 per cent in February, bringing YTD 2019 returns to +14.17 per cent, compared to -16.63 per cent returns for China-focussed funds in 2018. The biggest losers for the month were Brazil-focused funds, returning an average of -3.08 per cent in February. YTD returns for Brazil-focused funds are still in the green however, at +5.03 per cent.
Equity strategies continue be leaders in the industry, rebounding off their industry lagging returns from 2018. Activist funds for instance, which tend to have concentrated equity exposures, posted strong gains in February at +4.18 per cent and are at +8.81 per cent YTD.
Among primary strategies, Market Neutral Equity funds were the only primary strategy to produce aggregate negative returns in an otherwise positive equity market environment. Only 43 per cent of market neutral managers were able to produce gains during the month, causing average returns to come in at -0.39 per cent in February.
Macro hedge fund returns also lagged in February. Only 49 per cent of funds were able to produce positive results, but the average positive return outweighed the average negative (+1.67 per cent vs -1.23 per cent), allowing returns to squeak into positive territory at +0.13 per cent. Size was not an advantage for Macro funds in February, with the 10 largest Macro funds returning -0.30 per cent in February.