Multi-Factor Design

Hedge Funds End 2018 In The Red

The global hedge fund industry ended a volatile 2018 in the red, with aggregate performance for December at -2.15% and for the year at -4.86%, according to the latest eVestment hedge fund performance data released today. December’s negative performance marked the industry’s fifth consecutive month of negative performance in 2018.

Q4 hedge fund letters, conference, scoops etc

Multi-Factor Design

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The 2018 performance is in contrast to the industry’s strong aggregate performance of +8.93% in 2017 and almost universally positive performance among hedge fund markets, strategies and geographies in 2017. Additionally, according to Peter Laurelli, eVestment’s global head of research, the story in 2018 was very fund-specific, with some funds performing very well, while other funds faltered. This highlights the importance of doing deep research and due diligence in the hedge fund selection process.

Some other interesting points from the December and year end data include:

  • Despite the aggregate negativity, there were pockets of good relative returns, notably from some larger products, particularly within the Macro universe, yet large funds were not void of highly negative results as well.
  • Origination & Financing hedge funds were the big winners in returns in 2018, with performance of +3.94%.
  • Long/Short Equity and Activist strategies were hurt most by year-end market declines. Activist funds ended 2018 at -13.35%, suffering the industry’s largest losses outside of emerging markets. Long/Short Equity funds ended 2018 at -6.85%.
  • India and China-focused products posted the largest aggregate losses for the year of all segments, coming in at -17.04% and -16.84% respectively.

eVestment’s full December and 2018 hedge fund performance data is below.

Industry Benchmarks Dec Q4 2018 YTD 2018 2017
Hedge Fund Aggregate -2.15% -5.37% -4.86% 8.93%
50% MSCI World/50% Citi WGBI -2.61% -5.96% -4.60% 14.75%
S&P 500 -9.03% -13.52% -4.38% 21.83%
Primary Markets Dec Q4 2018 YTD 2018 2017
Broad Financial Derivatives 1.15% -2.31% -4.49% 2.32%
FX/Currency 0.55% 0.64% 1.28% -3.46%
Broad Multi-Market -0.60% -3.18% -3.93% 4.58%
Volatility/Options Strategies -0.68% -1.30% -0.96% 4.86%
Fixed Income/Credit -0.78% -2.08% 0.10% 6.04%
Commodities -1.36% -4.26% -6.30% 0.51%
Broad Capital Structure -1.60% -4.33% -2.13% 8.88%
Equity -3.68% -8.05% -7.56% 13.45%
Primary Strategy Dec Q4 2018 YTD 2018 2017
Managed Futures 1.20% -2.58% -5.26 2.73%
Market Neutral Equity 0.40% -2.07% -2.80% 3.54%
Relative Value Credit 0.37% -0.40% 1.13% 5.48%
Macro 0.15% -1.77% -2.89% 4.10%
Quantitative Directional Equity -0.70% -4.16% -3.17% 10.48%
Directional Credit -0.77% -2.04% 0.96% 5.31%
Multi-Strategy -0.83% -4.01% -3.11% 6.75%
Multi-Strategy Credit -1.14% -2.78% 0.08% 5.70%
Origination & Financing -1.15% -0.80% 3.94% 6.90%
Convertible Arbitrage -1.30% -3.25% -2.11% 5.71%
Event Driven -1.73% -4.15% -1.19% 7.40%
Distressed -2.77% -5.32% -0.65% 6.62%
Long/Short Equity -4.46% -9.63% -6.85% 12.12%
Event Driven – Activist -8.30% -12.62% -13.35% 10.90%
Prominent Universes by Size Dec Q4 2018 YTD 2018 2017
Ten Largest Hedge Funds -0.99% -3.15% -4.46% 5.11%
Ten Largest Long/Short Equity -2.81% -5.92% -6.75% 9.09%
Ten Largest Macro -0.24% -0.40% 0.65% 1.65%
Ten Largest Managed Futures 1.39% -4.00% -6.56% 3.46%
Economic Development Dec Q4 2018 YTD 2018 2017
Emerging Markets -1.70% -3.59% -11.02% 19.52%
Country Exposure Dec Q4 2018 YTD 2018 2017
India -0.08% 3.79% -17.04% 32.87%
Brazil -0.62% 10.19% -2.36% 14.78%
Russia -2.72% -7.08% -13.62% 13.01%
China -3.23% -8.97% -16.84% 34.76%

To download more eVestment data and research reports, please click here.

Article by Mark Scott, eVestment


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