Aggregate hedge fund performance was positive in April but equity strategies, which have taken in the vast majority of investor flows in 2014, were negative for the second consecutive month; according to eVestment’s April 2014 Hedge Fund Performance Report.
The industry rose 0.16 percent during the month and is up 1.35 percent year-to-date (YTD), on pace for an annualised return of only 4.12 percent for the year.
Equity strategies produced their second consecutive month of aggregate losses in April. Exposure to emerging markets, particularly China and Eastern Europe, were partly to blame for the universe’s decline but funds also appeared caught by the sell-off in the biotech and technology sectors.
In the same period equity losses were concentrated within smaller funds. Funds with over $1 billion in assets under management (AUM) were up 0.28 percent during the month while those focused on the tech sector faced the largest losses, at over 4 percent in April.
After facing a spurt of redemptions following fears of a rising rate environment in mid-2013, credit strategies have benefited from a decline in rate markets since the beginning of 2014.
Credit is the best producing primary market exposure for the hedge fund industry in 2014, ahead of volatility, with returns near 3 percent. The universe of credit strategies also happens to be outperforming the S&P 500 for the year.
Securitised credit and MBS-focused funds in particular are among the best performing strategies in 2014 after another strong month in April. MBS-focused funds were up 1.03 percent during the month and 4.37 percent YTD.
Commodity funds have quietly found themselves among the leaders of the industry in 2014 after good aggregate returns in April. Strong natural gas, grains and metals markets have all helped push returns near 2 percent YTD.
Macro strategies declined again in April and are now down 0.06 percent in 2014. As in March, smaller macro strategies were the primary source of losses in April.
Large macro funds were up 0.36 percent during the month, yet aggregate returns are only slightly positive for the year. Smaller macro strategies are down 0.18 percent in 2014.
