Long/Short Funds Lead Q1 Returns

Apr 25 2013 | 10:58am ET

Long/short strategies were the best-performing hedge funds in the first quarter of 2013, with cumulative net returns of 4.43%, according to the latest data from Preqin.

The strategy was also popular with institutional investors, 43% of whom planned to invest in long/short funds in the next 12 months.

Those investors will have some new long/short funds to choose from—58% of all hedge fund launches in Q1 2013 were long/short strategies.

Macro funds returned only 1.17% in the first quarter and accounted for only 14% of fund launches, down from 32% in the last quarter of 2012.

CTAs were the worst-performing hedge funds in Q1 with net returns of 0.21%; investor appetite for this strategy also fell, with CTAs representing 17% of investor searches compared to 25% in Q2 2012.

Event-driven strategies posted the highest rate of cumulative returns over the last 12 months, at 9.44%, and accounted for 11% of hedge funds launched in Q1. On the other hand, investor appetite for event-driven funds declined to 18% of searches from 27% in Q2 2012.

More than a quarter (28%) of fund launches in Q1 were first-time managers while the bulk (81%) were North-American base. European launches accounted for just 12% of the Q1 total.

Interest in UCITS-compliants funds was also up, with 14% of investor searches including a UCITS component compared to 7% in 2012.

Funds of hedge funds posted their highest net quarterly returns (3.16%) since Q1 2012. Single-manager hedge funds returned 3.35% in Q1 2013.

“Liquid strategies trading on equities, notably long/short equity, are increasingly being sought by institutional investors looking to take advantage of the current market rally,”  said Amy Bensted of Preqin in a statement. “As Preqin’s fund launch data demonstrates, long/short strategies represent well over half of known hedge fund launches in the first quarter of 2013; therefore investors targeting this strategy will have a wide choice of funds, both established and emerging, to fill these open mandates.”


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