Hedge Funds Have Strongest YTD Gains Since 2006

Tom Burroughes

9 May 2019

Hedge funds gained an average of 1.26 per cent in April, the fourth consecutive month of positive returns, which might lead to investors giving the sector more attention after it has been on defense in recent years.

So far this year, hedge funds have chalked up average gains of 6.52 per cent, the best first four months of a year since 2006, when aggregate gains were 7.62 per cent, according to eVestment, an investment analytics firm.

Hedge funds fell in the last five years of 2018 as equity markets and certain other sectors tanked. Such funds have seen their traditional management and performance fee model under pressure after years of indifferent results. Some renowned investors, such as Warren Buffett, have attacked the sector for not justifying their fees.

eVestment said that among primary strategies, event-driven models, such as activist strategies, returned an average of 2.79 per cent in April and 9.94 per cent so far this year. This is a noticeable turnaround from 2018, when this category of funds fell by 10.30 per cent.

Managed futures funds again produced big gains in April, returning an average of 2.03 per cent, bringing first-quarter 2019 returns to 4.66 per cent.

Long/short equity funds were another big winner in April, returning 1.79 per cent last month and 9.84 per cent year to date. This contrasts from losses of 7.03 per cent last year.

Russia-focused funds gained the most of any emerging markets segment in April, returning an average of 2.61 per cent, bringing YTD returns to 11.10 per cent.

China-focused funds underwhelmed in April with 0.74 per cent returns, but continue to be the industry’s best performing segment overall in 2019 with average YTD gains of 18.55 per cent.