Eurekahedge: Hedge Funds Up 0.48% in November, +3.60% YTD

Dec 14 2016 | 12:40am ET

Hedge funds returned to the plus column in a volatile November, according to a flash update of Eurekahedge’s Hedge Fund Index, riding market reaction to the U.S. election but still underperforming benchmark measures. 

The Eurekahedge Hedge Fund Index was up 0.48% during the month, bringing 2016 year-to-date returns to 3.60%. Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) gained 2.88% in November, with its 2016 year-to-date returns at 4.88%. 

Roughly 56% of underlying constituent funds for the index were in positive territory this month, the company said. Unsurprisingly, North American hedge fund managers posted the best returns among regional peers this month, with gains of 2.07% while among strategic mandates, event driven hedge funds led the tables with gains of 2.13%.

Next year promises more volatility for the markets, Eurekahedge said in its report. While the Trump-driven reflation theme could be positive for the U.S. economy, it is too early to discount the damage to the U.S. and world economy from his protectionist trade views, while a strengthening dollar could act as a check on the recovery, the Eurozone will remain a source of anxiety, and emerging market growth may be impacted by uncertainty arising from Trump's anti-trade rhetoric. 

Key highlights for November 2016:

  • Almost 19.3% of global hedge funds have posted double-digit gains in 2016, up from 17.6% in 2015 and well below 38.4% in 2013.
  • Among developed mandates, North American hedge funds lead the gains in November up 2.07%, followed by Japanese hedge funds, which were up 1.14% while European hedge fund managers languished in negative territory, down 0.39%. On a year-to-date basis, North American hedge funds gained 6.95% while European and Japanese peers lost 1.25% and 0.22% respectively.
  • Emerging market mandates have preserved their gains for 2016 and are up 7.11% year-to-date with strong showing from underlying Latin America and Eastern Europe/Russia mandates. The Eurekahedge Frontier Markets Hedge Fund Index is up 7.62% for the year with ongoing OPEC-Russia led support for oil prices likely to buoy their returns further.
  • Among strategic mandates, distressed debt hedge funds posted the best 2016 year-to-date returns, gaining 11.94%, followed by event driven and relative value hedge funds, which were up 8.86% and 7.46% respectively.
  • The Eurekahedge CTA/Managed Futures Hedge Fund Index posted the steepest decline among strategic mandates in October and lost 0.27%, with underlying FX and commodity-focused strategies declining 1.21% and 0.19% respectively while trend-following mandates were up 0.73%. 
  • Asia ex-Japan hedge fund managers were down 1.23% during the month but remain up 0.57% for the year, on track to post their worst performance since 2011. Underlying Greater China mandated equity long/short funds remained firmly in the red with losses of 2.90%.
  • On a year-to-date basis, Latin American hedge funds lead the table, gaining an impressive 17.25% over the past 11 months, thanks to the performance of underlying equity markets and the recovery in oil prices. 

Eurekahedge’s data was based on 47.09% of funds which have reported November 2016 returns as at 13 December 2016. The company tracks asset flows, hedge fund performance and regional key trends across the hedge fund universe, tracking more than 130 data points on more than 24,000 alternative funds in its database.

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