Hedge Funds Recover From Red-Ink January: Preqin

Event-driven strategies continue eight-month winning streak

Hedge funds gained 1.7% in February, taking the industry benchmark to 1.4% for the year, according to Preqin’s Hedge Fund Analyst.

Despite gains of more than 2% for some strategies, however, hedge funds lagged wider equity markets and indices. The S&P 500 was up 4.3% in February.

“Investors may be reassured that the widespread negative returns across many of Preqin’s hedge fund performance benchmarks in January look to be a temporary blip rather than the start of a longer downward trend,” Amy Bensted, Preqin’s head of hedge fund products, said in a statement.

Declining equity markets led much of the January downturn on concerns around emerging markets and following winter storms in the U.S., she said.

“However, equity benchmarks improved in February, with indices such as S&P 500 reaching record levels; strategies which have a focus on equities, in turn, also saw strong performance for the month. Event-driven and long/short funds both posted returns of over 2% in February, taking their 12-month net returns to 16% and 11.9%, respectively.”

Preqin reported these other key facts:

  • Event-driven funds were the top performers in February, gaining 2.7% and continuing their eight-month streak of positive performance.
  • Relative value funds, which had posted the best returns in January, added just 0.8% in February.
  • Emerging markets funds, the only regional benchmark in the red this year, returned 0.9% in February, not enough to regain losses of 2.1% in January.
  • Funds of hedge funds focused on macro strategies have outperformed single-manager macro strategies funds year to date, posting net returns of 1.3%, compared with 0.2%.
  • CTAs returned 1.8% in February, recovering a 1% loss in January. This was the benchmark’s first monthly return over 1.5% since July 2012.
  • North America-focused funds topped all regional benchmarks, adding 2.6% in February. This compared with 1.8% for Europe and 1.3% for Asia/Pacific.
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