The HFM Global Index gained 5.9% in Q1 2021; its 12-month return through Q1 was over 30% – a near-term record
Q1 2021 hedge fund letters, conferences and more
HFM Insights’ latest report highlights the performance of hedge funds in Q1 2021 which features a record 12-month gain, a new high-water mark for AuM and a rise in potential searches headline a strong opening quarter for hedge funds. Strong Q1 performance took the average hedge fund’s 12-month gain past 30%, in what is likely to prove one of the industry’s strongest – and most consistent – periods to date. Equity and event-driven funds were among the leading contributors to Q1 returns, with the latter, and macro funds, benefiting from net inflows YTD.
Highlights:
- The HFM Global Index gained 5.9% in Q1 2021, with three positive months and its 12-month return through Q1 was over 30% – a near-term record
- Investor flows added $13.5bn across the first two months of the quarter
- $1bn+ event-driven funds also generated notable Q1 performance (8.8%)p
- New/potential searches accounted for over 60% of Q1 investor mandates
A summary is included below and the full report with data pack 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.
Overview – Managers Maintain Recent Performance Run And Investor Interest:
Further inflows and a favourable trading environment have helped hedge funds make a strong start to 2021. The HFM composite index returned 5.9% in Q1, its fourth positive quarter in a row, taking its 12-month gain past 30% – one of its strongest 12-month periods on record.More than 70% of the funds to report March numbers to HFM by mid-April had recorded a positive Q1, with equity funds (8.1%) and event-driven funds (8.0%) the leading contributors. Larger event-driven managers recorded particularly strong Q1 performance, having been well placed to benefit from the accelerated timetables of late for corporate reorganisation, mergers and debt acquisitions. And investors have taken note. Event-driven funds took a sizable proportion of February’s $6.5bn net flow. Added to January commitments, February’s global total took net flows past $10bn for the first two months of the year. A significant uptick in the proportion of investor activity engaged in potential searches (as opposed to completed or discontinued searches) suggests that flows in March, and Q2, will remain positive.
Performance – Strong Quarter Propels HFM Composite To Best 12-Month Return:
All of HFM’s top-level strategy indices recorded positive returns in Q1 2021, leading the global composite index to its third 5%+ quarter in the past four and a 12-month gain of over 30% – one of it’s strongest periods on record. As with H2 2020, the equity index led with an uptick of 8.1% closely followed by the event-driven index at 8.0%. And in a reversal of Q4 2020, the performance of Apac-based managers trailed that of their European and North American peers. This followed a significant uptick in Western economic activity and equity market confidence after the relative dominance of Asian economies during Covid- ravaged 2020. In other markets, a spike in the price of Brent Oil Futures in Q1 was another conspicuous indicator of the ongoing correlation between asset prices and international power politics. Market movements in 2021 – and the inherent opportunities for managers therein – will continue to be tied to countries’ efforts to emerge from further Covid-19 lockdowns and the success, or lackthereof, they have in rolling out vaccines.
Hedge fund performance vs. selected benchmarks, Q1 2021 vs. Q4 2020
(Source: HFM)
Hedge fund performance matrix, Q1 2021
| Q1 2021 | Mar-21 | Feb-21 | Jan-21 | Q1 2021 | 12-month | Sharpe | 2020 | 3-yr ann. | 5-yr ann. |
| HFM Global Index | 1.4% | 3.1% | 1.3% | 5.9% | 31.3% | 4.4 | 13.0% | 8.2% | 7.8% |
| HFM North America Index | 2.0% | 3.6% | 1.3% | 7.0% | 35.5% | 4.3 | 14.3% | 10.4% | 10.1% |
| HFM Europe Index | 1.0% | 3.0% | 0.7% | 4.7% | 22.3% | 3.6 | 9.5% | 6.1% | 5.4% |
| HFM Asia-Pacific Index | -0.4% | 2.7% | 1.8% | 4.1% | 37.2% | 4.3 | 17/1% | 7.1% | 8.5% |
| HFM Equity Index | 1.3% | 5.2% | 1.5% | 8.1% | 48.4% | 4.2 | 19.3% | 11.6% | 11.0% |
| HFM Event-driven Index | 2.6% | 3.9% | 1.3% | 8.0% | 44.5% | 4.4 | 11.9% | 9.5% | 10.1% |
| HFM Managed Futures Index | 0.8% | 2.8% | -0.2% | 3.5% | 10.9% | 1.5 | 9.6% | 6.4% | 3.6% |
| HFM Macro Index | 0.9% | 1.7% | -0.1% | 2.5% | 18.7% | 2.8 | 10.9% | 7.2% | 5.8% |
| HFM Credit/FI Index | 0.3% | 1.1% | 1.3% | 2.7% | 23.3% | 4.8 | 5.7% | 5.6% | 7.4% |
(Source: HFM)
Data as of 9 April. Performance indices represent the mean average return of the funds included in the relevant strategies that report to HFM. To view HFM’s median indices, please visit the HFM database. Indices are based on reported data at time of publication and are subject to future revision. RFR applied to the Sharpe is 2%.
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