Emerging Funds Outperform Larger Peers In 2021 – ValueWalk Premium
Hedge funds HFM

Emerging Funds Outperform Larger Peers In 2021

HFM Insight’s latest performance update covers the performance and assets under management of emerging funds in May, alongside the HFM Indices performance.

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Highlights:

  • Hedge funds managing less than $1bn averaged gains of 1.4% in May, extending returns for the year to 8.9%.
  • Sub-billion-dollar hedge funds are outperforming $1bn-plus peers in 2021
  • Long/short equity leading returns among sub-$1bn funds despite market turbulence
  • Event-driven also performing well but strategy’s top returns by $1bn-plus funds

Overview

Hedge funds managing less than $1bn averaged gains of 1.4% in May, extending returns for the year to 8.9%. That puts smaller funds ahead of billion-dollar-plus funds, which averaged 1% in May and 6.9% for the year so far. Long/short equity gains have fuelled the outperformance, with the industry’s largest strategy by assets and funds up 11.2% among sub-$1bn funds so far this year, compared to 7.7% for those over. It has been a positive but lopsided start to the year for long/short equity, with early gains in growth and tech stocks before a factor rotation brought gains for longsubdued value names. Retail traders acting in coordination around GameStop and other stocks have brought turbulence, while equity market gains have limited shorting opportunities. Alongside long/short equity, event-driven is the standout strategy this year following the renewal in corporate dealmaking and big gains from backing Spac-structures in January and February. But unlike long/short equity, larger event names are outperforming smaller peers, with $1bn-plus funds up 15.1% year-to-date compared to gains of 10.8% among sub-$1bn funds.

Hedge fund performance | YTD through May 2021 (%)

Hedge funds HFM

(Source: HFM Insights)

HFM Benchmark May-21 Apr-21 Mar-21 Q2 2021 12 months YTD 2020
<$1bn hedge funds 1.4% 2% 0.9% 3.4% 26% 8.9% 13.1%
HFM Global Composite 1.5% 2.1% 0.9% 3.63% 25.3% 8.9% 11.9%
+$1bn hedge funds 1% 2.2% 0.7% 3.2% 19.8% 6.9% 9.6%
FoHF composite 0.6% 2.1% 0.2% 2.71% 20% 5.5% 10.7%
S&P 500 0.55% 5.24% 4.24% 5.82% 38.1% 11.9% 16.3%

Overall industry AuM ($bn) | May 2021*

Hedge funds HFM

(Source: HFM Insights)

Analyst note: Data subject to future revision. * AuM managed by North American, APAC and European managers, excludes Ucits.

Hedge fund performance | 12m compound return

Hedge funds HFM

(Source: HFM Insights)

Analyst note: Indices are based on reported data at time of publication and are subject to future revision.

HFM Benchmarks 12m return 12-month Sharpe 3yr ann. return 36-month Sharpe
<$1bn hedge funds 26% 4.3 31.5% 1.0
+$1bn hedge funds 19.8% 4.4 27.2% 1.0
HFM Composite 25.2% 4.3 28.7% 0.9

 

HFM INDICES PERFORMANCE TRACKER

Fund May-21 Apr-21 Mar-21 Q2 2021 12 months YTD 3yr ann.
Event-driven | +$1bn 2.8% 4.1% 0.9% 7% 42.1% 15.1% 9.1%
L/S equity | <$1bn 1.3% 2.6% 0.5% 3.9% 38.5% 11.2% 12.2%
Multi-strategy | <$1bn 1.1% 1.4% 0.7% 2.5% 29.2% 10.9% 10.6%
Event driven | <$1bn 1.4% 2.5% 1.4% 3.9% 31.8% 10.8% 8.3%
HFM Global Composite Index 1.5% 2.1% 0.9% 3.63% 25.3% 8.9% 8.9%
Managed futures | +$1bn 1.7% 2.9% 1.2% 4.6% 11.1% 7.8% 7%
L/S equity | +$1bn 1% 3.1% 0.1% 4.1% 27.4% 7.7% 11.3%
Managed futures | <$1bn 1.1% 2.2% 0.7% 3.3% 12.3% 7.3% 6.6%
RV/arbitrage | <$1bn 1% 1% -0.1% 2% 23.5% 6.6% 11.7%
Macro | +$1bn 1.2% 2.5% 1% 3.7% 17.2% 5.9% 7.2%
Macro | <$1bn 1.8% 1.4% 0.3% 3.2% 19% 5.9% 8.9%
HFM FoHF Composite Index 0.6% 2.1% 0.2% 2.71% 20% 5.5% 6.1%
Multi-strategy | +$1bn 1.2% 1.2% 0.9% 2.4% 11.3% 5.3% 5.7%
RV/arbitrage | +$1bn -0.7% 1.7% -1.7% 1% 21.9% 4.8% 9.5%
Fixed income/credit | +$1bn -0.5% 0.9% 0.5% 0.4% 15.7% 3.7% 5.5%
Fixed income/credit | <$1bn -0.1% 0.8% 0.7% 0.7% 14.7% 3.6% 6.8%

(Source: HFM Insights)


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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