Inflation, market volatility and geopolitical tensions in Europe appear to have taken a toll on the global hedge fund business in January, with aggregate returns coming in at -1.89 per cent for the first month of the year, according to eVestment’s January 2022 hedge fund performance data.
The hedge fund industry ended 2021 at +9.87 per cent and January’s return is the lowest start to the year since 2016, according to eVestment Global Head of Research Peter Laurelli.
“Of course, how the year starts has historically not been reflective of its ultimate outcome,” Laurelli notes. “Despite its rocky start of -2.63 per cent in 2016, the industry ended the year with an aggregate return of +5.74 per cent. And in 2018 the industry produced an average loss of -4.94 per cent, though January 2018’s average return was a solid +2.29 per cent. It’s definitely too early to make any predictions as to how 2022 will shape up for the business.”
Commodity strategies produced the best results in January among all hedge fund types eVestment tracks, with these funds producing average gains of +3.21 per cent. January’s strong returns from Commodity funds comes on the heels of the segment’s robust +20.90 per cent return for full year 2021 and average returns of +5 per cent or more for 2020 and 2019.
Macro hedge funds were strong performers in January, with returns coming in at +1.47 per cent to start the year. This is a strong turnaround for the year for these funds, which returned an average of just +2.45 per cent for all of 2021. The 10 largest Macro funds also performed well in January, with average returns of +1.00 per cent.
Managed Futures funds also appeared to navigate January well, with an average return of +0.74 per cent, following full year average returns of +6.95 per cent in 2021.
Brazil-focused funds started the year on a high note after several years of dismal performance. These funds had average returns of +4.42 per cent in January, following average returns of -18.77 per cent in 2021 and -9.50 per cent in 2020.
Event Driven – Activist funds saw the biggest reversals of fortune in January, with average returns of -7.71 per cent, which is a sharp turnaround from the +26.58 per cent average return for the segment in 2021.
Long/Short Equity funds also fared poorly out of the gate in 2022, with the overall segment seeing returns of -4.07 per cent and the 10 largest Long/Short Equity funds faring worse with average returns of -4.62 per cent.
The largest hedge funds started the year on a sour note, with the 10 largest hedge funds reporting to eVestment seeing January returns of -3.58 per cent. The 10 largest hedge funds finished 2021 with average returns of +6.36 per cent.