The HFM Long/Short Equity Composite is up 6.0% YTD – ValueWalk Premium
Long Short Equity Hedge Funds

The HFM Long/Short Equity Composite is up 6.0% YTD

Hedge funds: long/short strategies on a roll as value stocks rally, and trend-followers lead CTA recovery in February

Q4 2020 hedge fund letters, conferences and more

HFM Insight’s newest hedge fund strategy report covers the latest performance vs benchmarks, investor flows and key trend analysis. This month’s release features the long/short equity and managed futures strategy.

Highlights:

  • The HFM Long/Short Equity Composite is up 6.0% YTD through February 2021, overtaking the S&P 500 on a 12-month basis after another strong month.
  • The HFM Managed Futures Composite Index was up 3.0% in February, after posting -0.2% in January, as the average CTA returned to positive territory YTD (2.8%).

Long/Short Equity Hedge Funds Performance

Long/short equity funds continued their rally with a 6.0% average gain year-to-date through February, in one of the industry’s best February’s in decades. Stock market volatility receded from its retail-frenzied spike in January but remained elevated, creating a ripe alpha environment for long/short managers. For the first time since the start of the pandemic, value stocks outperformed growth stocks as managers rotated out of tech names and into cyclicals.

Value makes a comeback: The growth-to-value factor rotation in February signalled hedge funds actively positioning portfolios for a post-pandemic economy. Value stocks rallied on the back of steady Covid-19 vaccine distribution and declining hospitalisations, with the market showing optimism on a re-opening of the economy. Value-oriented investors have patiently waited for a recovery amid a decade of underperformance. Before the recent rotation, price discrepancies between growth and value reached “extreme levels” in late 2020 and was “nearing a three standard deviation event”, according to T. Rowe Price.

L/S equity performance tracker (YTD 2021 vs total 2020)

Long Short Equity Hedge Funds

(Source: HFM Insights)

HFM Long/Short Equity Composite vs benchmarks (12 month comp. and rolling 3yr ann.)

Long Short Equity Hedge Funds

(Source: HFM data)

Benchmark Feb-21* Jan-21* Dec-20 2021 YTD* 2020 2019 12-month* 3 yr ann.*
HFM L/S Equity Composite 4.3 1.6 4.8 6.0 19.1 12.8 30.0 10.1
HFM Global Composite 3.0 1.1 3.5 4.1 12.2 9.8 18.9 7.4
S&P 500 2.6 -1.1 3.7 1.5 16.3 28.9 29.0 12.0

*Data from funds to report last month’s performance to HFM at the time of publication.

CTA/Managed Futures Performance

Managed futures funds rebounded from widespread losses in January, with the HFM Managed Futures Composite Index up 3.0% in February, after posting -0.2% in January, as the average CTA returned to positive territory YTD (2.8%).

Gains amid bond sell-off: Against the backdrop of rising inflation expectations, bets on rising commodity prices and lower bond prices were key drivers of returns last month.

Managed futures performance tracker (YTD 2021 vs total 2020)

Long Short Equity Hedge Funds

(Source: HFM Insights)

HFM Managed Futures Composite vs benchmarks (12 months comp. and 3yr ann. rolling)

Long Short Equity Hedge Funds

(Source: HFM data)

Benchmark Feb-21* Jan-21* Dec-20 2021 YTD* 2020 2019 12-month* 3 yr ann.*
HFM Managed Futures Composite 3.0 -0.2 3.6 2.8 8.1 7.1 11.6 5.6
HFM Global Composite 3.0 1.1 3.5 4.1 12.2 9.8 18.9 7.4
S&P 500 2.6 -1.1 3.7 1.5 16.3 28.9 29.0 12.0

*Data from funds to report last month’s performance to HFM at the time of publication.

Investor Flows

Investor flows turned positive for equity managers in February but remain negative YTD. Flows turned negative in February for managed futures managers following negative performance in January.

Long/short equity flows, past 12 months vs all hedge fund flows ($bn) & Long/short equity MoM

Long Short Equity Hedge Funds

Managed futures flows, past 12 months vs all hedge fund flows ($bn) & Managed futures MoM

Long Short Equity Hedge Funds


ABOUT HFM

HFM provides hedge fund professionals with an unparalleled blend of business essential data, exclusive industry intel and market-leading events. Combining 22 years of industry heritage with a cutting-edge platform, to create true business intelligence; the intelligence needed to raise assets, allocate funds or source new business opportunities. Insights is the research and analysis service from Pageant Media, sitting within the company’s hedge fund intelligence network, HFM. The division produces research reports and analytical articles on a variety of topics in the global hedge fund industry, including business operations, investor relations, technology and regulation. Leveraging Pageant’s wealth of data and news sources, and with access to the HFM network’s vast membership, Insights is uniquely positioned, offering exclusive surveys and expert commentary. Learn more about HFM.


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