HFR: Hedge Funds Add Just 1.77% In First Half

Jul 3 2014 | 7:30am ET

Hedge funds had a very uninspiring first half of the year, missing out on most of the gains enjoyed by stocks during 2014’s first six months, an industry index shows.

The HFRX Global Hedge Fund Index returned just 1.77% in the first half, Hedge Fund Research said. During the same period, the Standard & Poor’s 500 Index returned better than 6%, as stocks continued to rally on the heels of last year’s impressive gains, taking many managers by surprise.

And it could have been worse: Much of the index’s first-half return came just last month, when it rose 0.93%.

Master-limited partnerships remained the one really bright spot in a sea of mediocre—or worse—returns. The HFRX MLP Index is up 16.69% on the year after adding 6.28% last month. The only other strategy tracked by the HFRX suite to beat the S&P500 in the first half was distressed restructuring, which managed a 6.68% jump after a 2.28% surge in June.

Fundamental growth funds are up 5.33% on the year (3.69% in June), event-driven funds 4.42% (1.57%), special situations funds 3.82% (1.38%) and credit funds 3.39% (0.56%). Multi-strategy funds rose an average of 1.88% (0.39%), relative-value arbitrage funds 1.59% (0.29%), equity hedge funds 1.27% (1.52%), equity market neutral funds 1.19% (0.42%), merger arbitrage funds 0.9% (0.16%) and convertible arbitrage funds 0.24% (down 0.21%).

Four strategies are losers so far in 2014: Systematic diversified commodity trading advisors have shed 2.71% (up 0.06% in June), emerging markets funds lost 0.74% (up 1.89%), macro funds and CTAs dipped 0.73% (up 0.08% in June), and fundamental value funds edged down 0.39% (up 0.7% in June).


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