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Hedge Funds Continue Fast Start To 2021
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After their robust gains in 2020, so far it looks as if the global hedge funds industry has logged a strong start to this year, with equity hedge strategies leading the charge.
Hedge fund returns increased in February, on top of previous
increases in January. Meanwhile, interest rates, commodity prices
and the expected rate of inflation all increased, according to a
firm that tracks the sector.
The HFRI Fund Weighted Composite Index® (FWC) gained 4.1 per cent
in February, while the investable HFRI 500 Fund Weighted
Composite Index rose by 3.2 per cent, according to data released
today by Hedge Fund
Research, the Chicago-based organisation.
“New stimulus measures, increasing vaccinations, and uncertainty
with regards to immigration and energy policy have shifted
macroeconomic and geopolitical volatility to include not only the
single stock or asset trends from concentrated, increased retail
trading but also cryptocurrency trading, energy exposure and
interest rate/inflation sensitivity,” Kenneth J Heinz, President
of HFR, said.
The HFRI FWC index experienced a wide dispersion in constituent
performance, as the top decile of the HFRI gained 16.3 per cent,
while the bottom decile fell by 3.1 per cent for the
month.
Total hedge fund capital rose to $3.6 trillion to begin 2021, up
$290 billion in the fourth quarter of 2020. Estimated Q4 2020 net
asset inflows totalled $3.0 billion, bringing total inflows for
the second half of 2020 to an estimated $16.0 billion, HFR
said.
The best performing strategies were in the equity hedge category
– these invest long and short to obtain market upside while
profiting from falls. The HFRI Equity Hedge (Total) Index rose by
4.8 per cent for the month, with strong contributions from a wide
dispersion of sub-strategy performance led by the high-beta,
long-biased energy, fundamental value, and technology
exposures.
Event-driven strategies, which often focus on unloved companies
as well as the price movements caused by mergers and company
events, also gained ground. The investable HFRI 500 Event-Driven
Index rose by 2.8 per cent for the month. The HFRI Event-Driven
(Total) Index gained 3.6 per cent.