Hedge funds closed out the first quarter the way they spent it: up, but trailing the broader markets.
Hedge Fund Research's HFRI Fund Weighted Composite Index rose 1.15% in March and 3.87% in the first quarter. By contrast, the Standard & Poor's 500 Index rose more than 10% in the year's first three months.
Returns were broadly positive across hedge fund strategies—with the notable exception of emerging markets funds. Excepting them, only two substrategies, short bias and energy and basic materials, were in the red last month, falling 2.39% (down 5.5% year-to-date) and 0.48% (down 0.23% YTD), respectively.
Yield alternatives funds did best in March, adding 3.66% (9.38% YTD). Technology and healthcare funds were up 2.93% (6.33% YTD) and multi-strategy relative-value funds 2.85% (5.2% YTD).
Relative value funds rose an average of 1.52% in March (3.75% YTD), equity hedge funds 1.45% (5.29% YTD), distressed and restructuring funds 1.34% (4.37% YTD), event-driven funds 1.02% (3.75% YTD), merger arbitrage funds 0.69% (0.88% YTD), equity market neutral funds 0.68% (2.62% YTD), convertible arbitrage funds 0.6% (2.34% YTD) and macro funds 0.54% (1.43% YTD).
Emerging markets funds fell, on average, 1.04% last month (up 2.39% YTD), but the returns were scattered. Asia ex-Japan funds rose 0.58% (up 4.85% YTD), but Russia and Eastern European funds lost 4.28% (down 0.72% YTD) and Latin American funds fell 1.96% (up 1.1% YTD).
Funds of hedge funds returned 1% on the month and are up 3.46% on the year.