Hedge funds suffer in volatile markets but outperform other benchmarks and offer bright spots

• tweet

• Print

• E-mail

• Track keywords

Opaque Industry Update – April was a difficult month in the asset/financial markets and the global hedge fund business was no exception, with the industry total return for the month coming in at -1.68% and year-to-date returns (YTD ) continued to fall red at -2.59%, according to the just released eVestment hedge fund performance data for April 2022. On the bright side, however, the hedge fund business still outperformed many other industry benchmarks (see chart below ), and among the funds that did well, some did exceptionally well.

The average return of -1.68% is due to the fact that only 36% of the fund’s eVestment stocks returned positive results in April and the difference between average gain (+3.7%) and average loss (-4.7 %) was the largest in 17 months.

“Despite disappointing overall numbers for the hedge fund business this year, there are bright spots among and within eVestment’s key fund types and strategies,” said Peter Laurelli, eVestment’s Global Head of Research. “Times like these underscore the importance of hedge funds in a balanced portfolio and the role of sound due diligence when considering what type of funds and which individual funds to invest in.”

Managed futures funds followed one of their best monthly returns on record in March with another strategy-leading return of +3.73% in April. The 2022 universe YTD average return of +13.55% is now more than double the next best strategy (macro, +6.60%). Even the largest products in this area have continued to outperform. The 10 largest reporting managed futures strategies had a total return of +4.97% in April and are now +16.10% YTD.

As mentioned, macro funds are also doing well so far this year, with April aggregate returns for these funds coming in at +2.08% and YTD returns at +6.60%. However, the top 10 macro funds lagged the overall strategy segment, with these largest funds posting +1.20% total returns and +2.56% YTD returns in April.

The only other primary strategy in the green for April and YTD, behind managed futures and macro funds, was distressed funds. These funds managed to generate a total return of +0.13% in April and have a year-to-date return of +0.56%.

Among eVestment stocks in the primary hedge fund markets, equity-oriented funds were the big underperformers in April with total returns of -3.99% in April and YTD returns of -7.79%. This is a sharp reversal after a streak of double-digit positive returns for equity funds from 2019-2020.

The challenges in the equity markets also fell on equity-oriented strategies. Event Drive activist funds are among the worst performing eVestment tracks for primary hedge fund strategies with total returns of -4.87% in April and -5.87% YTD. Long/Short Equity funds also underperform at -4.31% in April and -7.42% YTD. Funds focused on the financials, energy, health care and technology equity subsectors were also down to some extent in April and year-to-date.