Preqin: North America-Focused Hedge Funds Outperform As All-Strategies Index Gains 1% In November

Dec 16 2016 | 12:51am ET

Hedge funds posted gains in November on the strength of North America-focused and Event-driven managers, according to new data from industry observer Preqin.

Preqin’s All-Strategies Hedge Fund Index gained 1% for the month, bringing the benchmark measure’s year-to-date gains to 6.34%. North America-focused funds recovered from October 0.69% loss to book gains of 2.89%, the highest of any region during the month and pulling YTD gains to 9.09% - also the highest of any region. 

In contrast, Europe-focused hedge funds posted smaller gains of 0.09% in November, while Asia-Pacific funds suffered losses of 0.47%, Preqin said, taking YTD performance to 1.07% and 1.88%, respectively. 

All top-level strategies saw positive returns for November. Event-driven strategies saw the largest gains, at 2.34%, and have the best YTD return of any strategy at 10.74%. Meanwhile, relative value funds have the lowest YTD performance, returning 4.08% as of the end of November. 

Other key highlights from Preqin’s latest Hedge Fund Performance Report:

  • Emerging Markets Lose Out: In November, emerging markets-focused hedge funds suffered losses of 1.73%, while developed markets posted gains of 0.96%. However, in 2016 YTD, vehicles focused on emerging markets have returned 7.91%, above that of developed markets (+5.20%).
  • Large Funds Return to Form: 2016 has largely seen smaller funds post the highest returns. However, in November, funds larger than $1 billion posted 1.10%, the best performance of any size, with emerging and small funds made gains of 0.89% and 0.97%, respectively. 
  • CTA Struggles Continue: CTAs ended their run of negative performance in November, as they returned a 0.07% for the month. Despite this, CTA funds have made YTD losses of 0.30%, and 12-month performance is also negative, standing at -1.69%. 
  • A Positive Month for Activist Funds: 2016 has been a positive year for activist hedge funds so far. The trading style recovered from losses in October to post returns of 2.34% in November, and now have gains of 8.67% in 2016 YTD. Volatility-focused funds also saw gains of 0.85% in November, and have posted only one month of negative performance through the year so far.

“Hedge funds focused on North America generated healthy performance in November and exceeded all other regions, as firms capitalized on opportunities arising from the U.S. election result,” said Amy Bensted, Preqin’s head of hedge fund products, in a statement.

“The majority (53%) of hedge fund managers surveyed by Preqin in November said that they expect the performance of their portfolio to profit as a result of the U.S. election over the remainder of 2016. Europe- and Asia-focused funds have seen more marginal gains, but all regions have performed positively over the year so far. 

“Overall, the hedge fund industry has rebounded well over 2016 from the difficulties seen at the beginning of the year, and can approach 2017 with optimism as performance is on track to exceed 2015 and 2014,” she added.

“Although the industry benchmark has not made monthly gains exceeding 1% across most of the year, the run of positive performance from March to September was the longest consistent run of gains seen since 2012-13.” 

Founded in 2003, Preqin is a key source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.

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