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It’s been 12 months since the World Health Organisation declared the coronavirus outbreak a pandemic, and the unprecedented events of the past year have provided no shortage of challenges, be they political, social or economic. But the hedge fund industry has battled on throughout the upheaval, posting its best performance in a decade and reinforcing this asset class’s worth to investors’ portfolios.

This week, the very best of the European hedge fund ecosystem over the past year was honoured in Hedgeweek’s annual European Awards, compiled in conjunction with Bloomberg. From fund managers across the strategy spectrum to a full range of service providers, the awards recognised the European hedge fund industry’s commendable accomplishments in what has been a testing 12 months.

Such successes are now translating into very real opportunities for the industry this year, if new research published this week is anything to go by.

Credit Suisse’s 2021 Hedge Fund Investor Survey, which takes the temperature of allocator sentiment, suggests a majority of investors now believe hedge funds are best placed to enhance portfolio returns this year, amid predicted bouts of volatility and upheaval. Titled ‘A New Dawn’, the wide-ranging study also detected a “sense of urgency” among allocators keen to tap into new sources of returns amid a rapidly-shifting rate environment.

Meanwhile, on a performance basis, managers are maintaining their positive start to the year, according to new data from Hedge Fund Research. In February, the industry advanced 4.05 per cent overall, putting its year-to-date returns at more than 5 per cent, with equities, macro, commodities, activist and cryptocurrency strategies generating particularly strong gains.

As the first quarter draws to a close, the industry is keeping close tabs on the way the recent US treasury yield spike and OPEC+’s decision to maintain production cuts is reconfiguring investment opportunities across individual asset classes.

The dizzying oil price rally over the past few weeks has driven Westbeck Capital Management’s flagship fund to its biggest monthly return in almost a year, and the London-based commodities specialist said this week that further rises could be in the offing as vaccinations accelerate and economies unlock.

At the same time, BlueBay Asset Management believes the widening valuation gap between emerging markets fixed income and its developed markets counterpart is set to throw up “interesting opportunities” once the recent US treasury yield spike stabilises.

Finally, the ways in which hedge funds and alternative investments can positively affect communities was highlighted in a new report by King’s College London’s Policy Institute this week.

An independent KCL audit of credit and multi-strategy manager Cheyne Capital’s Social Property Impact Fund – which invests across affordable and keyworker housing, temporary accommodation, and homes for adults with learning disabilities – concluded the strategy has made a “real impact on individual lives” and offers “genuine value” to local authorities and housing providers.

Hugh Leask


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