Hedge Funds Slip 0.36% In April

May 8 2012 | 8:24am ET

Amid investor concerns about the European sovereign debt crisis and uncertainty surrounding European elections, the Hedge Fund Research’s HFRI Weighted Composite Index fell 0.36% in April, trimming its year-to-date gains to 4.4%.

The decline follows the index’s Q1 gain of 4.79%, its best first quarter performance since 2006.

April saw mixed results from various hedge fund strategies—relative value funds gained 0.21% on the month, with positive contributions from fixed income arbitrage, volatility arbitrage and asset-backed exposures.

The weakest performance came from equity hedge strategies, down 0.57% on the month (although still up 6.33% YTD).

Macro strategies were down 0.35% in April as declines across systematic (CTA) and discretionary strategies only partially offset gains in active trading funds. Event driven strategies slipped 0.16%, as gains by activist and credit arbitrage strategies were offset by losses in distressed and special situations funds.

Funds of hedge funds shed 0.26% in April.

"April hedge fund performance marked a transition from the equity beta driven gains in the first quarter to an environment more similar to the risk-averse environment which dominated 2011," stated Kenneth J. Heinz, president of HFR. "While the transition has contributed to modest declines in equity and macro strategies in April, many funds which have maintained conservative positioning are now in the process of adjusting exposures through the current environment. Hedge fund gains throughout 2012 are likely to continue across a more diverse continuum of  assets and strategies, with these complementing core and tactical equity  markets exposures industry wide."


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