Alt Investments
Hedge Funds End Long Winning Streak In July

Investors were concerned about heightened uncertainties caused by a renewed focus on the spread of virus variants.
Hedge funds recorded a narrow loss in July, the first decline
this sector has logged since September last year, industry
figures showed.
The HFRI Fund Weighted Composite Index® (FWC) fell by 0.6 per
cent in July, while the investible HFRI 500 Fund Weighted
Composite Index declined -0.5 per cent, according to data
released today by Hedge Fund Research, the Chicago-based firm
tracking the sector said.
The HFRI FWC Index has gained 9.5 per cent through the first
seven months of 2021, including the strongest performance in the
first half of a calendar year since 1999 - a fact that has
reignited interest in a sector that had suffered weak performance
and outflows a decade ago amidst the global financial
crisis.
In the trailing nine-month period ending July 2021, the HFRI FWC
has risen by more than 21 per cent. As reported previously by
HFR, driven by investor inflows and strong performance, total
hedge funds industry capital surged to $3.96 trillion through
mid-year 2021.
The performance dispersion of the underlying index constituents
narrowed in July, as the top decile of the HFRI gained an average
of 4.8 per cent, while the bottom decile declined an average of
7.1 per cent for the month. That translates into a top-bottom
spread of 11.9 per cent in July from 13.0 per cent in June.
“Hedge funds navigated a volatile market environment in July with
mixed performance across sub-strategies and narrow declines
across broad-based indices as, despite strong corporate earnings,
investors focused on increased uncertainty surrounding renewed
focus on the spread of virus variants,” Kenneth J Heinz,
president of HFR, said.
“The evolving macroeconomic environment continues to be fluid
with reflationary, expansionary trends subject to sharp reversals
and falling rates and inflation expectations. Hedge funds remain
tactically positioned for these shifts, with high realized equity
market volatility, oscillating between record highs and sharp
correction cycles within intra-month, or even shorter, market
cycles.”