The first month of 2014 was highly mixed for the hedge fund industry.
The average hedge fund lost 0.6% in January, according to the HFRI Fund Weighted Composite Index. But that was a much narrower loss than that suffered by the Standard & Poor's 500 Index, which the Hedge Fund Research benchmark trailed badly all of last year.
And while the overall HFRI index lost ground along with most strategies tracked by the suite, a fair number enjoyed gains, especially relative-value funds. Technology and healthcare funds did best in January, rising 1.88%, followed by corporate fixed-income funds at 1.24%, asset-backed funds at 1.18% and convertible arbitrage funds at 1.15%.
Equity-market neutral funds gained 0.72% on the month, yield alternatives funds 0.57%, relative-value funds 0.54%, short-bias funds 0.38%, multi-strategy funds 0.23%, distressed and restructuring funds 0.02% and active-trading macro funds 0.01%.
Emerging markets funds were battered in January, with the HFRI Emerging Markets (Total) Index dropping 2.6%. Latin America funds were hit hard by troubles in Argentina and Brazil, falling 6.15% on the month. Russia and Eastern Europe funds dropped 3.66%, global funds 2.34% and Asia ex-Japan funds 1.12%.
Other losing strategies included energy and basic materials funds, down 2.05%; systematic diversified macro funds, down 1.79%; and macro funds, down 1.13%. Quantitative directional funds were off by 0.77%, equity hedge funds by 0.73%, activist funds by 0.7%, event-driven funds by 0.37%, merger arbitrage funds by 0.14% and discretionary thematic funds by 0.05%.
Funds of hedge funds dropped 0.62% on the month.
"Risk and volatility quickly returned to complacent global financial markets to begin 2014, contributing to and highlighting significant strategic, intra-strategy and exposure-specific categorical performance disparities and correlation deviations," HFR President Kenneth Heinz said. "While beta-oriented emerging markets, equity hedge and quant CTA strategies led declines, fundamentally-based RVA, technology and quantitative equity market neutral posted gains."