The Eurekahedge Hedge Fund Index rallied 2.22 per cent in January, supported by the global equity market rally which resulted from the Fed’s dovish stance and optimism over potential progress in the US-China trade talks.
The MSCI AC World Index (Local) gained 7.36 per cent over the month, recovering most of the losses it suffered in December last year. Returns were positive across geographic mandates, as most of the fund managers generated gains on the back of the equity market rallies around the globe. North American fund managers gained 3.65 per cent during the month, while their peers focusing on Asia ex-Japan generated 3.11 per cent returns. The weaker US dollar and cautious tone of the Fed created tailwinds for the emerging markets throughout the month, resulting in one of the best monthly showing of the Eurekahedge Emerging Markets Hedge Fund Index in recent years, as it edged 5.46 per cent higher in January.
Roughly 72.5 per cent of underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in January, in contrast to how only 35.5 per cent of these fund managers avoided losing money in December last year. Fund managers utilising equity long-biased strategies topped the table with their 5.49 per cent gain in January, while on the other end of the spectrum long volatility strategic mandate ended the month down 5.08 per cent as market volatilities remained suppressed throughout the month.
On an asset-weighted basis, hedge funds were up 0.70 per cent in January, as captured by the Mizuho Eurekahedge Hedge Fund Index (USD). The index slumped 4.23 per cent throughout 2018.
North American long short equity hedge fund managers gained 5.28 per cent in January, kicking off the year with their strongest monthly performance over the past decade, as the region’s equity markets reacted positively to the dovish tone of the Fed and hopes that the US-China trade relations could improve.
The Eurekahedge European Hedge Fund Index gained 2.22 per cent in January, supported by improving global trade outlook and expectations that the UK government would avoid a disorderly Brexit.
The Eurekahedge CTA/Managed Futures Hedge Fund Index declined 0.37 per cent during the month as fund managers struggled to capture the trend reversal in energy and commodity sectors.
Fund managers utilising AI/machine learning strategies returned 2.76 per cent in January, after recording their first year of losses. The Eurekahedge AI Hedge Fund Index was down 5.18 per cent throughout 2018.
Returns across the CBOE Eurekahedge Volatility Indexes were mixed in January, with long volatility mandate down 5.08 per cent and short volatility mandate up 4.52 per cent as market volatilities dwindled throughout the month. The CBOE VIX Index plummeted 34.35 per cent in January as the risk-off sentiment among investors eased off.
The Eurekahedge ILS Advisers Index was up 0.44 per cent in January, ending its streak of losses through the final quarter of 2018 which resulted from the catastrophic losses incurred by the 2018 Atlantic hurricane season. ILS fund managers posted losses of 5.60 per cent and 3.57 per cent in 2017 and 2018 respectively.
The Eurekahedge Crypto-Currency Hedge Fund Index declined 9.08 per cent in January, narrowly outperforming Bitcoin which slumped 10.98 per cent over the month. Crypto-currency hedge fund managers lost 71.63 per cent throughout 2018, posting their worst year on record.