eVestment: Hedge Funds Return +0.33% In March As Equity Strategies Shine

Apr 12 2017 | 8:23pm ET

Hedge funds were broadly positive in March, booking the fifth positive month in a row and the thirteenth in the last fourteen, according to new data from research provider eVestment. 

Hedge funds, as measured by eVestment's Hedge Fund Aggregate benchmark, returned an average of +0.33% in March and +2.63% in Q1 2017. Equity strategies were the primary winners in both periods, eVestment said in its March 2017 Hedge Fund Industry Performance Report, while returns for the past 12 months now stand at +8.48%.

After three consecutive months when over 70% of all hedge funds produced positive results, the figure dropped to 60% in March (still well above the prior two-year average of 56%) as managed futures and commodities had difficulties and distressed strategies posted their first loss in 14 months. Large gains in emerging markets, steadiness from quantitative equity and dispersion among macro portfolios rounded out a mostly positive first quarter for the hedge fund industry.

The long string of positive results is encouraging investors to giving renewed attention to the hedge fund sector, allocating $7.9 billion in new funds to the $3 trillion industry February, eVestment reported. 

Additional highlights from the report:

  • Among major strategies, Quantitative Direction Equity and Long/Short Equity strategies were among the strongest performers, returning +0.77% and +0.74% respectively.
  • Among primary markets, Volatility/Options Strategies and Equities were strong performers, with +0.85% and +0.81% performance respectively. Equity market funds were among the strongest performers among key hedge fund universes in Q1, returning +3.98% during the past quarter.
  • Among regional focused funds, India funds made the strongest showing in March and Q1, returning +5.13% for the month and +14.76% for the quarter.
  • China-focused funds are also showing signs of strength, returning +2.70% in March and +8.82% for the quarter, while funds focused on Japan and Brazil both turned negative in March, although their quarterly performance numbers are still in positive territory.
  • After two consecutive negative months, commodity funds are the most negative of any asset class or primary strategy in 2017, with -1.12% returns in March and -0.75% returns for Q1.
  • Large managed futures volatility continues, elevated losses in March. After industry leading returns in February, the largest managed futures funds went to the other end of the spectrum, producing industry leading losses in March. The universe’s average returns went negative for Q1 2017, and they are down over 7% in the last twelve months. 
  • Quantitative equity strategies rise near the top of the industry in Q1. Consistently positive returns from the universe have landed it as the second best strategy in Q1 2017, trailing only their primarily discretionary peers within the long/short equity universe. 
  • March brought greater dispersion for large macro funds. Before March, the largest macro funds’ last-twelve-months average returns were over 7%. The largest managers were outperforming not only their strategy peers, but also much of the rest of the industry. In March, average returns for the largest funds were negative, bringing Q1 to near flat. What the universe produced in March was a wide variety of outcomes, from decent gains to elevated losses. Wide dispersion of performance makes allocating to the strategy with confidence difficult.
  • China-focused funds are up over 8% so far in 2017. While investor flows have yet to shift to the positive, funds focused on Chinese markets have produced three solid monthly gains to start 2017.

Atlanta-based eVestment was founded in 2000 by Jim Minnick, Matt Crisp and Heath Wilson. The company boasts one of the largest, most comprehensive global databases of traditional and alternative strategies and provides institutional investment data intelligence and analytic solutions to clients worldwide.


In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...