March was a volatile month, as demonstrated by bank failures and continued geopolitical and economic worries. Hedge funds had a mixed time, although certain strategies made gains.

Hedge funds posted mixed performance in March, with major indices of results dipping last month. Bank risk soared amidst instability and dislocations resulting from several bank failures, such as that of Silicon Valley Bank, and the acquisition of Credit Suisse by UBS. 

The HFRI Fund Weighted Composite Index® fell an estimated 0.8 per cent for the month, the investible HFRI 500 Fund Weighted Composite Index lost 1.2 per cent (estimated), and the HFRI 400 (US) Fund Weighted Composite Index fell 1.5 per cent (estimated), according to Hedge Fund Research. Performance gains were led by equity hedge strategies, Chicago-headquartered HFR said.

Crypto glitter
The HFR Cryptocurrency Index continued its strong start to the year, surging by 5.2 per cent in March to increase its year-to-date return to 31.4 per cent. 

Performance dispersion widened for the month, as the top decile of the HFRI FWC constituents advanced by an average of +7.5 per cent in March, while the bottom decile fell by an average of -10.1 per cent, representing a top/bottom dispersion of 17.6 per cent. 

Equity hedge funds, which invest long and short across specialized sub-strategies, led strategy gains for the month, driven by “fundamental growth” and “quantitative directional” sub-strategies, as well as short exposures to financials. 

Both the HFRI Equity Hedge (Total) Index and the investible HFRI 500 Equity Hedge Index advanced by an estimated 0.9 per cent in March. 

Fixed income-based, interest rate-sensitive strategies posted mixed performance in March, as the US Federal Reserve raised interest rates, though bond yields declined on flight to quality resulting from increased risk in financials. The HFRI Relative Value (Total) Index declined an estimated 0.5 per cent in March.

Event-driven strategies, which often focus on out-of-favor, deep value equity exposures and speculation on M&A deals, declined in March as risk in financials soared. The investible HFRI 500 Event-Driven Index fell by 1.8 per cent (estimated), while the HFRI Event-Driven (Total) Index declined by an estimated 1.65 per cent.