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Hedge funds post mixed results in February

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The hedge fund industry improved on losses of 2.69 per cent in January, but still posted negative performance of -0.06 per cent in February, according to figures released by Preqin.

Macro strategies posted the greatest gains (0.55 per cent) and are the only leading hedge fund strategy to hold a positive 2016 year-to-date return (0.88 per cent). In comparison, credit strategies continued to struggle, recording their fourth consecutive month of negative returns with losses of 0.86 per cent. 2016 YTD performance for the strategy is now at -1.92 per cent.
Meanwhile, CTAs continued their robust performance with gains of 2.18 per cent in February. This represents their best monthly return since January 2015, and marks the first time in that period that CTAs have posted two consecutive months of positive performance. Building on gains of 0.95 per cent in January, February’s returns take the 2016 YTD benchmark for CTAs to 3.15 per cent.
Other Key Hedge Fund Performance Statistics:
Systematic hedge funds again outperformed discretionary funds, adding 0.91 per cent in February to take year-to-date returns to 0.01 per cent. Discretionary funds continued to suffer losses in 2016 YTD, with February’s return of -0.39 per cent following January’s negative performance of -3.18 per cent. 

Equity strategies returned -0.08 per cent in February 2016, following losses of 4.31 per cent in January. However, many equity markets, such as the S&P 500 which lost 0.41 per cent in February, suffered greater losses. 

Emerging hedge funds (those with less than USD100 million in AUM) were the only size class* to see positive returns in February posting 0.14 per cent. Funds larger than USD1 billion returned -0.76 per cent, while medium-sized funds (those between USD500-999 billion) saw the greatest losses of -1.00 per cent.
Alternative mutual funds and UCITS hedge funds posted further losses in February (-0.24 per cent and -0.92 per cent respectively). 12-month returns for both fund types are also negative, with alternative mutual funds at -6.55 per cent and UCITS at -5.58 per cent.
Emerging Markets funds posted gains of 1.61 per cent in February, the greatest monthly returns of any geography, having lost 3.12 per cent in January. North America-focused funds made gains of 0.21 per cent and Europe-focused vehicles returned -0.31 per cent.
“Hedge funds posted a near neutral return in February 2016 as many traditional markets showed continued problems over the month,” says Amy Bensted (pictured), hedge of hedge fund products at Prqin. “In a period where investors may be suffering large losses from traditional products in their portfolios, the ability of hedge funds to help investors weather turbulent markets and preserve investor capital is an attractive feature of these alternative funds to investors.

“Some strategies in particular, such as macro strategies and CTAs, can provide downside protection and uncorrelated returns and have demonstrated their worth so far in 2016. Fund managers will be looking to build on February’s performance in order to prove to their investors the value hedge funds can provide on a long-term risk-adjusted basis.” 

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