Alt Investments
Hedge Funds Continue Strong Late-Spring Run
A robust set of figures for most hedge fund strategies in May - adding to April gains - may continue to reinforce the view that this sector is having one of its better years for some time.
Hedge funds advanced in May, extending April gains as the
reopening of businesses accelerated throughout the month, and in
spite of historically high unemployment figures and nationwide
political protests across major US cities, figures showed.
The HFRI Fund Weighted Composite Index® gained 2.5 per cent in
May, led by the equity hedge and event-driven strategies, as
reported today by Hedge Fund
Research.
The investable HFRI 500 Fund Weighted Composite Index gained 2.1
per cent for the month, bringing the two-month gain to 6.4 per
cent. Since January, that index is down by 4.84 per cent. To
put these figures into context, global equities have recovered
sharply from their March lows after central banks and governments
aggressively pumped money into the system – begging the question
of how sustainable such a recovery is. The MSCI World Index
of developed countries’ equities is down by only 3.09 per cent
since the start of this year.
Details
The equity hedge performance was led by multi-strategy,
technology, and fundamental growth exposures, with the HFRI EH:
Multi-Strategy Index surging by 5.8 per cent. The volatile energy
sector also extended April gains as oil posted a record monthly
surge, with the HFRI EH: Energy/Basic Materials Index advancing
by 4.1 per cent.
Event-driven strategies – such as those profiting from mergers
and acquisitions – also rose, with the HFRI Event-Driven (Total)
Index advancing by 2.9 per cent.
Investors are starting to take on more risk, enabling the hedge
fund sector as a whole to make progress, Kenneth Heinz, president
of HFR, said.
But he issued this cautionary note: “While recent gains have been
compelling, the financial markets environment remains both fluid
and opportunity-rich across asset classes, with the tailwinds of
policymakers committed to accommodative interest rates and a
resurgent retail consumer contrasting against the risk of
additional virus impact or destabilising social unrest.”
