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Hedge funds gain in March, but industry trails stock market

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Hedge funds returned to positive territory in March, advancing 0.34% for the month, but the industry is lagging the broader stock market, which gained 3.67%, according to data published by Backstop BarclayHedge.

Year-to-date, the hedge fund industry has advanced 2.60% through the end of March, though the S&P 500 Total Return Index gained 7.50% over the same period.

Backstop Barclay Hedge tracks the performances of more than 6,900 hedge funds, funds of funds and CTAs.

A healthy majority of hedge fund subsectors reported positive returns in March. Leading the way was the Technology Index, advancing 4.31% for the month, the Option Strategies Index, up 2.96%, the Pacific Rim Equities Index, returning 2.04%, the Emerging Markets Global Equities Index, gaining 1.92%, and the Volatility Trading Index, up 1.52%.

Among the hedge fund subsectors losing ground in March were the Fixed Income Arbitrage Index, off -2.19%, the Distressed Securities Index, down -1.52%, the Emerging Markets Global Fixed Income Index, losing -1.00%, the Emerging Markets Latin American Equities Index, retreating -0.67%, and the Event Driven Index, down -0.89%.

All but a handful of hedge fund subsectors were in positive territory for year-to-date through the end of March. The Technology Index set the pace, gaining 9.87%, while the Emerging Markets MENA Index advanced 9.05%, the Pacific Rim Equities Index was up 4.57%, the Equity Long Bias Index gained 3.96% and the Emerging Markets Global Equities Index rose 3.30%.

Subsectors in the red for the year to date included the Emerging Markets Latin American Equities Index and the Emerging Market Latin America Index, off -1.04% and -0.12% respectively. The Distressed Securities Index joins them, down -20 basis points thus far in 2023.

“Fears of contagion stemming from the banking crisis in the U.S. and Eurozone set some hedge funds back in March while others benefited richly from another positive month in equity markets,” said Ben Crawford, Head of Research at Backstop BarclayHedge.

“Particularly noteworthy were gains in the technology sector with the Nasdaq posting its best quarter since 2020 and technology-focused hedge funds reaping commensurate rewards.”

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