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
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 Benchmarks | Jan | Last 3mo | Q4 2018 | 2018 | 2017 |
| Hedge Fund Aggregate | 3.91% | 1.22% | -5.54% | -5.05% | 8.94% |
| 50% MSCI World/50% Citi WGBI | 4.59% | 2.69% | -5.96% | -4.60% | 14.75% |
| S&P 500 | 8.01% | 0.26% | -13.52% | -4.38% | 21.83% |
| Primary Markets | Jan | Last 3mo | Q4 2018 | 2018 | 2017 |
| Equity | 5.44% | 1.46% | -8.04% | -7.53% | 13.44% |
| Broad Capital Structure | 4.26% | 1.03% | -5.49% | -3.26% | 8.88% |
| Fixed Income/Credit | 2.66% | 1.14% | -2.12% | 0.07% | 6.04% |
| Commodities | 2.07% | -0.33% | -3.98% | -6.14% | 0.43% |
| Broad Multi-Market | 1.95% | 0.81% | -3.00% | -3.85% | 4.65% |
| Volatility/Options Strategies | 1.91% | 1.63% | -1.83% | -1.61% | 4.81% |
| FX/Currency | 0.90% | 0.52% | 0.27% | 0.90% | -3.46% |
| Broad Financial Derivatives | -1.76% | -1.29% | -2.82% | -5.00% | 2.33% |
| Primary Strategy | Jan | Last 3mo | Q4 2018 | 2018 | 2017 |
| Long/Short Equity | 5.97% | 0.61% | -9.71% | -6.96% | 12.13% |
| Distressed | 4.80% | 0.55% | -5.03% | -0.34% | 6.64% |
| Event Driven – Activist | 4.18% | -2.00% | -10.59% | -11.33% | 11.13% |
| Event Driven | 3.36% | 0.35% | -4.78% | -1.84% | 7.42% |
| Directional Credit | 2.72% | 0.95% | -2.28% | 0.69% | 5.32% |
| Convertible Arbitrage | 2.71% | 1.02% | -3.30% | -2.15% | 5.71% |
| Multi-Strategy Credit | 2.06% | -0.17% | -2.85% | 0.01% | 5.70% |
| Relative Value Credit | 1.61% | 0.21% | -1.92% | -0.45% | 5.48% |
| Multi-Strategy | 1.29% | -0.73% | -4.32% | -3.38% | 6.76% |
| Macro | 1.11% | 0.94% | -1.51% | -2.64% | 4.05% |
| Origination & Financing | 0.38% | 0.14% | -0.73% | 4.50% | 6.70% |
| Market Neutral Equity | 0.33% | -1.37% | -2.42% | -3.08% | 3.57% |
| Quantitative Directional Equity | 0.30% | -2.36% | -5.53% | -4.56% | 10.48% |
| Managed Futures | -0.87% | -0.15% | -2.98% | -5.64% | 2.74% |
| Prominent Universes by Size | Jan | Last 3mo | Q4 2018 | 2018 | 2017 |
| Ten Largest Hedge Funds | 0.45% | -0.32% | -1.72% | -0.34% | 4.90% |
| Ten Largest Long/Short Equity | 2.81% | 0.14% | -5.11% | -5.02% | 9.09% |
| Ten Largest Macro | -0.23% | 0.73% | 1.02% | 2.26% | 2.24% |
| Ten Largest Managed Futures | 0.28% | -1.72% | -4.44% | -6.67% | 4.00% |
| Economic Development | Jan | Last 3mo | Q4 2018 | 2018 | 2017 |
| Emerging Markets | 5.81% | 5.82% | -3.49% | -10.94% | 19.55% |
| Country Exposure | Jan | Last 3mo | Q4 2018 | 2018 | 2017 |
| Brazil | 10.70% | 9.66% | 10.57% | -2.02% | 15.13% |
| China | 7.07% | 6.85% | -8.75% | -16.64% | 34.76% |
| Russia | 6.44% | 2.19% | -7.28% | -13.86% | 13.11% |
| Asia ex-Japan | 3.45% | 4.24% | -4.62% | -11.46% | 22.13% |
| Japan | 1.17% | -3.10% | -6.72% | -7.96% | 13.77% |
| India | -3.77% | 4.22% | 4.52% | -16.46% | 32.87% |
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Article by by Mark Scott, eVestment
