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North American hedge funds post best regional returns in November

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Recovery continues in hedge funds according to Eurekahedge which found that hedge funds were up 0.48 per cent during the month of November, with 2016 year-to-date returns coming in at 3.60 per cent.

Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) gained 2.88 per cent in November with its 2016 year-to-date returns at 4.88 per cent. Roughly 56 per cent of underlying constituent funds for the Eurekahedge Hedge Fund Index were in positive territory this month, with majority of them being long/short equities mandated. North American hedge fund managers posted the best returns among regional peers this month, with gains of 2.07 per cent while among strategic mandates, event driven hedge funds led the tables with gains of 2.13 per cent.

Eurekahedge writes: “We believe that 2017 will hold more volatility in store for the markets. While the Trump driven reflation theme could be a positive driver for the US economy, it is too early to discount the damage to the US and world economy from his protectionist trade views.

“Further a strengthening USD will act as another check on the recovery within the US economy and it is very likely that the Fed might be able to slot only one rate hike in 2017 once the euphoria around 'Trumponomics' is grounded. The Eurozone will be another source of anxiety for the markets, where a fledgling economic recovery, a possibly (relatively) painless recovery for the UK post-Brexit and the social tensions arising from immigration would embolden and tilt the odds in favour of Euro-sceptics. Across emerging markets, uncertainty arising from Trump's anti-trade rhetoric coupled with the capital outflows could impact growth. The question remains – while Trump moves to America first, will the US Fed follow suit or continue to act as the world’s central bank?”
Key highlights for November were that hedge funds gained 0.48 per cent in November and 3.60 per cent year-to-date with underlying markets, as represented by the MSCI AC World Index (Local) up 4.88 per cent for the year. Almost 19.3 per cent of global hedge funds have posted double digit gains in 2016, up from 17.6 per cent in 2015 and well below 38.4 per cent in 2013.

Eurekahedge reports that among developed mandates, North American hedge funds lead the gains in November up 2.07 per cent, followed by Japanese hedge funds which were up 1.14 per cent while European hedge fund managers languished in negative territory, down 0.39 per cent. On a year-to-date basis, North American hedge funds gained 6.95 per cent while European and Japanese peers lost 1.25 per cent and 0.22 per cent respectively.

Emerging market mandates have preserved their gains for 2016 and are up 7.11 per cent year-to-date with strong showing from underlying Latin America and Eastern Europe/Russia mandates, Eurekahedge writes and the Eurekahedge Frontier Markets Hedge Fund Index is up 7.62 per cent for the year with ongoing OPEC-Russia led support for Oil prices likely to buoy their returns further.

 Among strategic mandates, distressed debt hedge funds posted the best 2016 year-to-date returns, gaining 11.94 per cent, followed by event driven and relative value hedge funds which were up 8.86 per cent and 7.46 per cent respectively.

The Eurekahedge CTA/Managed Futures Hedge Fund Index posted the steepest decline among strategic mandates in October and lost 0.27 per cent, with underlying FX and commodity-focused strategies declining 1.21 per cent and 0.19 per cent respectively while trend-following mandates were up 0.73 per cent.
 Asia ex-Japan hedge fund managers were down 1.23 per cent during the month, up 0.57 per cent for the year and on track to post their worst performance since 2011. Underlying Greater China mandated equity long/short funds remained firmly in the red with losses of 2.90 per cent.


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