Hedge Funds’ February performance slump

Hedge fund performance fell in February as global equities declined, ending a streak of fifteen consecutive monthly gains for Hedge Funds Research’s (HFR) fund weighted composite index.

The index declined 1.8% for the month, led by losses in quantitative, trend-following commodity trading advisor strategies, though all main strategy areas experienced losses for the month.

It was the largest decline since January 2016 but inclusive of the February performance, the index gained 0.5% in year to date.

The February decline contrasts with hedge fund performance in January, which saw the strongest monthly returns since September 2010.

Macro hedge funds posted the largest drop among the main strategies in February as US equities fell and interest rates climbed on expectations of accelerating inflation.

Equity hedge funds also waned in February, though losses were partially offset by exposure to technology. Parity strategies flagged as equities fell and interest rates increased and cryptocurrency funds also declined, though they pared steep intra-month losses as many cryptocurrencies partially recovered by month-end, as the HFR Blockchain Index fell 9.5% for the month.

Kenneth J. Heinz, president of HFR, said that despite the decline, the thematic drivers of hedge fund performance have not changed and may have accelerated throughout the month.

He added: “US inflation and interest rates, trade negotiations and the newly proposed tariffs, corporate M&A, and continued application of blockchain technology are likely to drive industry performance, creating both long and short opportunities, throughout 2018.”

©2018 funds europe

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