Hedge Funds Performance

Activists continue to benefit from strong equity markets

The $3 trillion hedge fund industry entered 2017 in a state of uncertainty. Flows had been persistently negative, and returns were generally perceived to have been disappointing. However, returns across the industry have been broadly positive this year, not just in February, but for the last year.

2016 Hedge Fund Letters

For the third consecutive month in February, over 70% of all hedge funds produced positive results, and returns over the last twelve months are near 11%. February marked a much needed rebound for large managed futures funds and continued outperformance by the concentrated equity-focused activist universe. For an industry needing to show consistency to stem redemptions, gains in 2017 and over the last twelve months are much needed positive signs.


  • Hedge funds returned an average of 1.08% in February, and +2.24% YTD 2017.
  • Large managed futures funds had a much needed big month in February, while the largest macro managers continue to outperform their peers.
  • Commodity funds produced losses in February, one of only two segments producing aggregate declines in February.

Activists Lead, Managed Futures Rebound Amid Continued Broadly Positive Industry Performance

Hedge funds returned an average of 1.08% in February, and +2.24% YTD. Returns have been broadly positive, with February being the twelfth month of positive returns in the last thirteen. In the last twelve months, average returns have been in double digits, +10.95%.

Hedge Funds Performance

Hedge Funds

Key Points

  • Returns across the industry have been broadly positive.
    For the third consecutive month, over 70% of all hedge funds produced positive results in February. The industry has needed to show consistency and decent returns to stem redemptions. Returns in 2017, and over the last twelve months are much needed positive signs.
  • Large managed futures funds had a much needed big month.
    After average losses of -6.74% in the last six months, and redemptions accelerating from the universe in Q4 2016 and into 2017, the largest managed futures funds excelled in February, returning +3.36%, their best month since June 2016.
  • Activists continue to benefit from strong equity markets.
    After a very strong 2016, activist’s average return of +2.53% in February places the universe as the top performing strategy in early 2017.
  • Commodity strategies the lone decliner in February.
    As one of the only segments of the industry to see aggregate net inflows in 2016, commodity fund performance will be watched closely by investors. The universe was the only market/strategy segment to post declines in February.
  • The largest macro funds continue to outperform their peers.
    The macro segment has been much maligned in the last couple of years, however performance within the largest funds, on an aggregate basis, has been more than decent. Average returns near 7% in 2016, and 10% in the last twelve months are likely being noticed by investors seeking return outside of traditional primary markets.

EM Outperformance Continues into Second Month of 2017 Led by India and Brazil Exposure

Emerging market strategies produced returns more than double that of developed market strategies in February for the second month in a row. Exposure to developed Europe produced below average performance, while Russia was the lone segment with losses.

Hedge Funds Performance

Key Points

  • China-focused funds are up over 6% in 2017.
    While investor flows have yet to shift to the positive, funds focused on Chinese markets have produced two solid monthly gains to start 2017.
  • Brazil finally emerges from extended drawdown.
    Having narrowly outperformed Russia in 2016 as the best performing segment of the hedge fund industry, Brazil-focused funds are again the industry’s best in 2017 by a wide margin. More significantly, with February’s gains the universe has finally emerged from its drawdown caused by its industry leading losses of 2015.

Article by eVestment


Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Welcome in the new year by signing up up for ValueWalkPremium today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 1/31/2019 or after next 30 23 subscribers take advantage whichever comes first – please do not share this discount with others