Multi-Factor Design

Equity, EM Funds Among Big Hedge Fund Winners In January

Global hedge funds, which ended a challenging 2018 with an industry aggregate return of -5.05%, started off strong in January, with an industry return just shy of +4% according to eVestment’s January 2019 hedge fund performance data. The industry’s overall +3.91% return in January reversed a trend of five consecutive months of negative industry returns and the average gain was the largest in a month since May 2009 when the average return was +5.14%.

Q4 hedge fund letters, conference, scoops etc

Multi-Factor Design

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Funds with exposure to the BRIC countries – minus India – were among the big winners in January. Funds focused on Brazil returned +10.70% last month, funds focused on China returned +7.07% and funds focused on Russia returned +6.44%. These funds have a long way to go to make up for their negative returns in 2018 (as low as -16.64% for China-focused funds in 2018), but the positive returns are likely to be welcomed by investors in these funds. India-focused funds were in the red for January, continuing their negative return trend from 2018.

Other interesting points from the latest eVestment hedge fund performance data include:

  • Equity funds were big winners in January. Among primary fund markets, Equity funds returned +5.44% in January, a marked contrast to the -7.53% returns with which these funds ended 2018. And among primary strategies, Long/Short Equity strategies returned +5.97% in January, also a marked turnaround from these funds’ -6.96% returns in 2018.
  • Other strong performers in primary markets were Broad Capital Structure funds and Fixed-Income/Credit funds, which returned +4.26% and +2.66% in January.
  • Across primary strategies, fund performances were almost uniformly positive in January, a contrast to the sea of red for full year 2018. Besides Long/Short Equity funds, other strong performers among primary strategies in January were Distressed funds, returning +4.80%, and Event Driven-Activist funds, returning +4.18%.
  • Among primary strategies, the exception to the overall positive returns were in Managed Futures funds, which were in the red – but just barely – for January at -0.87%. This is a challenging, though not catastrophic, start to the year considering Managed Futures funds were negative for full-year 2018, returning -5.64% last year.

Below is a full look at eVestment’s January 2018 hedge fund data with various historical perspectives.

Industry BenchmarksJanLast 3moQ4 201820182017
Hedge Fund Aggregate3.91%1.22%-5.54%-5.05%8.94%
50% MSCI World/50% Citi WGBI4.59%2.69%-5.96%-4.60%14.75%
S&P 5008.01%0.26%-13.52%-4.38%21.83%
Primary MarketsJanLast 3moQ4 201820182017
Equity5.44%1.46%-8.04%-7.53%13.44%
Broad Capital Structure4.26%1.03%-5.49%-3.26%8.88%
Fixed Income/Credit2.66%1.14%-2.12%0.07%6.04%
Commodities2.07%-0.33%-3.98%-6.14%0.43%
Broad Multi-Market1.95%0.81%-3.00%-3.85%4.65%
Volatility/Options Strategies1.91%1.63%-1.83%-1.61%4.81%
FX/Currency0.90%0.52%0.27%0.90%-3.46%
Broad Financial Derivatives-1.76%-1.29%-2.82%-5.00%2.33%
Primary StrategyJanLast 3moQ4 201820182017
Long/Short Equity5.97%0.61%-9.71%-6.96%12.13%
Distressed4.80%0.55%-5.03%-0.34%6.64%
Event Driven – Activist4.18%-2.00%-10.59%-11.33%11.13%
Event Driven3.36%0.35%-4.78%-1.84%7.42%
Directional Credit2.72%0.95%-2.28%0.69%5.32%
Convertible Arbitrage2.71%1.02%-3.30%-2.15%5.71%
Multi-Strategy Credit2.06%-0.17%-2.85%0.01%5.70%
Relative Value Credit1.61%0.21%-1.92%-0.45%5.48%
Multi-Strategy1.29%-0.73%-4.32%-3.38%6.76%
Macro1.11%0.94%-1.51%-2.64%4.05%
Origination & Financing0.38%0.14%-0.73%4.50%6.70%
Market Neutral Equity0.33%-1.37%-2.42%-3.08%3.57%
Quantitative Directional Equity0.30%-2.36%-5.53%-4.56%10.48%
Managed Futures-0.87%-0.15%-2.98%-5.64%2.74%
Prominent Universes by SizeJanLast 3moQ4 201820182017
Ten Largest Hedge Funds0.45%-0.32%-1.72%-0.34%4.90%
Ten Largest Long/Short Equity2.81%0.14%-5.11%-5.02%9.09%
Ten Largest Macro-0.23%0.73%1.02%2.26%2.24%
Ten Largest Managed Futures0.28%-1.72%-4.44%-6.67%4.00%
Economic DevelopmentJanLast 3moQ4 201820182017
Emerging Markets5.81%5.82%-3.49%-10.94%19.55%
Country ExposureJanLast 3moQ4 201820182017
Brazil10.70%9.66%10.57%-2.02%15.13%
China7.07%6.85%-8.75%-16.64%34.76%
Russia6.44%2.19%-7.28%-13.86%13.11%
Asia ex-Japan3.45%4.24%-4.62%-11.46%22.13%
Japan1.17%-3.10%-6.72%-7.96%13.77%
India-3.77%4.22%4.52%-16.46%32.87%

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

Article by by Mark Scott, eVestment

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