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Preqin: Hedge funds maintain performance momentum in February

First Published 15th March 2017

Returns of 1.18% take 12-month performance to the highest level recorded since May 2013.

The Preqin All-Strategies Hedge Fund benchmark recorded returns of 1.18% in February, building on the 1.43% gains seen the previous month. This contrasts with the losses that hedge funds incurred in February 2016: the industry has now recorded 11 months of positive gains in the past year, and 12-month performance has consequently risen to 13.63%, the highest level since May 2013 (+13.76%).

Most leading hedge fund strategies returned positive figures in February, with event driven strategies (+1.46%) and equity strategies (+1.54%) funds once again posting the strongest gains.

Other Key Hedge Fund Performance Facts:

  • Relative value strategies funds were the only leading strategy to record losses in February, with returns of -0.04%. Macro strategies (+0.60%), credit strategies (+0.71%) and multi-strategy funds (+0.85%) all returned less than 1.00% for the month.
  • Over 12 months, equity strategies funds have now returned 16.21%, while event driven strategies have made gains of 20.63% .
  • CTAs bounced back from losses in January to post gains of 1.01% in February , although performance is still negative (-1.32%) over a 12-month period.
  • Activist hedge funds have followed a strong year in 2016 with two consecutive months of gains in 2017; returns of 0.99% in February take 12-month performance to 18.71% .
  • Asia-Pacific hedge funds posted strong returns of 1.82% in February , above the level seen for Europe- (+0.94%) and North America-focused (+1.11%) funds.
  • Smaller hedge funds continue to outperform their larger counterparts in 2017. Funds with less than $100mn in AUM returned 1.38% in February , compared to gains of 1.14% for large funds of $1bn or more.
  • Despite suffering losses in 2016, funds of hedge funds have now posted four successive months of positive returns; gains of 0.64% in February have put 2017 YTD performance at 1.46% and 12-month gains at 4.79%.

Amy Bensted, Head of Hedge Fund Products said: "Although much focus in recent months has been on the perceived underperformance of hedge funds, managers have, in fact, been posting their strongest performance seen in recent years. The Preqin All-Strategies Hedge Fund benchmark has recorded positive performance in 11 of the past 12 months, and overall 12-month gains are now at their highest level in almost four years.

Despite the better performance environment over the past 12 months, fundraising remains difficult for hedge funds as investors continue to reduce or consolidate their portfolios. However, some strategies may be better placed to attract fresh inflows: nearly a quarter of active hedge fund investors surveyed by Preqin at the end of 2016 stated that they intended to increase their exposure to event driven and equity strategies, and these strategies are generating some of the highest returns through the year so far."

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