The Preqin All-Strategies Hedge Fund benchmark recorded returns of 1.18 per cent in February, building on the 1.43 per cent gains seen the previous month.
This contrasts with the losses that hedge funds incurred in February 2016.
The industry has now recorded 11 months of positive gains in the past year, and 12-month performance has consequently risen to 13.63 per cent, the highest level since May 2013 (+13.76 per cent). Most leading hedge fund strategies returned positive figures in February, with event driven strategies (+1.46 per cent) and equity strategies (+1.54 per cent) funds once again posting the strongest gains.
Relative value strategies funds were the only leading strategy to record losses in February, with returns of -0.04 per cent. Macro strategies (+0.60 per cent), credit strategies (+0.71 per cent) and multi-strategy funds (+0.85 per cent) all returned less than 1.00 per cent for the month.
Over 12 months, equity strategies funds have now returned 16.21 per cent, while event driven strategies have made gains of 20.63 per cent.
CTAs bounced back from losses in January to post gains of 1.01 per cent in February, although performance is still negative (-1.32 per cent) over a 12-month period.
Activist hedge funds have followed a strong year in 2016 with two consecutive months of gains in 2017; returns of 0.99 per cent in February take 12-month performance to 18.71 per cent.
Asia-Pacific hedge funds posted strong returns of 1.82 per cent in February, above the level seen for Europe- (+0.94 per cent) and North America-focused (+1.11 per cent) funds.
Smaller hedge funds continue to outperform their larger counterparts in 2017. Funds with less than USD100 million in AUM returned 1.38 per cent in February, compared to gains of 1.14 per cent for large funds of USD1 billion or more.
Despite suffering losses in 2016, funds of hedge funds have now posted four successive months of positive returns; gains of 0.64 per cent in February have put 2017 YTD performance at 1.46 per cent and 12-month gains at 4.79 per cent.
Amy Bensted, head of hedge fund products at Preqin, says: “Although much focus in recent months has been on the perceived underperformance of hedge funds, managers have, in fact, been posting their strongest performance seen in recent years. The Preqin All-Strategies Hedge Fund benchmark has recorded positive performance in 11 of the past 12 months, and overall 12-month gains are now at their highest level in almost four years.
“Despite the better performance environment over the past 12 months, fundraising remains difficult for hedge funds as investors continue to reduce or consolidate their portfolios. However, some strategies may be better placed to attract fresh inflows: nearly a quarter of active hedge fund investors surveyed by Preqin at the end of 2016 stated that they intended to increase their exposure to event driven and equity strategies, and these strategies are generating some of the highest returns through the year so far.” 

