Hedgeweek European Awards 2021

Early indicators for 2020’s year-end returns suggest the hedge fund industry overall finished the year in what Man FRM describes as “modestly positive territory” – a commendable showing given the momentous upheaval brought about the coronavirus pandemic.

Dig a little deeper, though, and the numbers will ultimately show that, across the wide spectrum of investment strategies that make up today’s hedge fund offerings, performance is again – as has always been the case throughout the years – defined by a considerable degree of dispersion. Despite the unprecedented events of the past 12 months, it seems the more things change, the more they stay the same.

Even before the year drew to a close, 2020 was seeing a pretty stark gulf between winners and losers, especially among the industry’s most well-kent faces.

Brevan Howard Asset Management’s range of funds ended the year in strong double-digit territory. Pierre Andurand, the high-profile oil-focused hedge fund chief, made an emphatic return to winning ways: his main Andurand Commodities Fund added some 68 per cent, while his Discretionary Enhanced strategy has reportedly surged more than 150 per cent in the same period.

On the flipside, however, some of the best-known hedge fund figures with the longest track records – such as David Harding, head of quantitative investment firm Winton Group, and contrarian macro manager Crispin Odey, to name just two – have seen assets take a sharp tumble.

As a new year begins, fund managers of different hues continue to grapple with the various economic and operational challenges thrown up by Covid-19. Anecdotal evidence suggests active management and trader skill will face ever-closer scrutiny this year by an investor community faced with looming economic uncertainty and the potential for further market disruption.

As Bitcoin roars to fresh highs, the fervor around crypto-focused hedge funds is here to stay. Yet other sectors and strategies are piquing allocator interest.

Financials-focused manager EJF Capital is tapping into banks’ and other financial services firms’ solid performance throughout the pandemic.

Managed futures – as measured by Société Générale’s main SG CTA Index, a key industry benchmark – begin 2021 on a high having posted their best monthly return in more than five years.

And while equity short sellers lost more than USD600 million on negative wagers against FTSE 100 shorts at the end of last year, the likelihood of volatility spikes amid a backdrop of new and continuing challenges (Covid, the Biden presidency, and the still-unfolding story of Brexit) presents major opportunities – and, it must be said, pitfalls – for stock-pickers and macro funds.

All of which speaks to the perennially topsy-turvy nature of this business.

Plus ça change.

Hugh Leask
Editor, Hedgeweek



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