April Gains Fortify A Strong Six Months For Multi-Strategy Hedge Funds

April gains fortify a strong six months for multi-strategy, while fixed income net inflows and performance gains mark strong month

Q1 2021 hedge fund letters, conferences and more

HFM Insight’s latest strategy reports covers the latest performance vs benchmarks, AUM, investor flows and key trend analysis. This month’s release features the multi-strategy and fixed income hedge fund strategies.

Highlights:

• The HFM Multi-strategy Composite Index was up 7.5% YTD at the end of April
• Investor flows for multi-strategy were negative in April (-$0.5bn) but remained positive YTD ($0.8bn)
• The HFM Fixed Income Composite Index was up 3.5% YTD at the end of April
• Investor flows for fixed income were positive in April ($4.8bn) but remained negative YTD (-$0.7bn)

A summary is included below and the compiled report is available for download. If you require more information on this report, have data queries or interview requests, please do not hesitate to contact me. As a reminder, with Pageant Media’s acquisition of Eurekahedge, you now have insights from both HFM and Eurekahedge when it comes to information and data requests – feel free to check in about data from either brand.

Multi-Strategy

April gains fortify a strong six months for multi-strategy: The average multi-strategy hedge fund gained 1.3% in April as multi-discipline managers continued to build a strong six months following a challenging start to the pandemic period. HFM’s Multi-strategy Composite Index currently leads the global composite YTD (7.5% to 7.4%) and on a three-year annualised basis (8.6% to 8.2%) but trails over 12 months (24.6% to 25.9%). Despite robust recent performance, investors have favoured other strategies of late, with HFM data showing that multi-strategy managers saw outflows in April when the wider industry added more than $25bn. Multi-strategy also saw $20.6bn of net outflows in 2020, suggesting that some investors have remained sceptical over its merits.

However, HFM research from the end of 2020 found that all investors planned to increase their allocations to multi-strategy in H1 2021, with all investor types planning notable net positive. However, if aggregated data suggests investors are lukewarm to the strategy, generally, it is because some have had their interests drawn to larger funds: several brand-name multi-strategy firms have been aggressively adding headcount in recent months following periods of strong performance and inflows, according to HFM intel.

(Source: HFM Insights)

Fixed Income

Net inflows and performance gains mark strong month: HFM’s Fixed Income Composite Index gained 0.9% in April and 3.5% YTD, while net investor flows for the month were nearly $5bn, as credit hedge fund managers built on steady recent progress. Inflation continued to be the dominant theme in fixed income markets during April, but the benchmark 10- year US Treasury yield steadied, having already risen sharply in Q1. Credit hedge fund managers attracted fresh capital from investors during April and are close to reversing the outflows they experienced during Q1.

Away from debates over short-term performance, investors have shown a growing interest in green bond funds. Figures from the Climate Bond Initiative think thank suggest 2021 may mark yet another record in green bond issuance. With fixed income hedge fund managers’ strong returns in Q1 translating into positive flows in March and April, their response to investor interest in green and ESG-compliant funds will likely prove key to maintaining a positive trajectory longer term.

(Source: HFM Insights)

*Analyst note: HFM performance indices represent the mean average return of funds on the HFM platform. Indices are based on reported data at time of publication and are subject to future revision.

Download full report with charts

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