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Hedge funds struggle through November

Hedge-fundHedge fund returns were dispersed in November as the industry tried to come back from a poor October performance, with leaders returning 5%, and laggards losing more than 6%.

Arbitrage, credit and emerging markets were the main performers, but offsetting these were energy and basic materials, leading the HFRI Fund Weighted Composite Index to an overall decline of -0.16%.

The top decile index constituents posted an average gain of 5.4% for the month, while the bottom decile lost 6.6%.

The HFRI Emerging Markets (Total) Index returned 2.3%, led by Asia ex-Japan funds, which jumped 5%.

Equity-focused hedge funds produced mixed performance in November, with wide exposure and sub-strategy dispersion within the equity hedge sector. The index for this sector fell 0.07%.

Other sub-strategies in this sector - fundamental growth and fundamental value sub-strategies - showed “extreme divergence”, HFR said. The equity equity hedge Fundamental Growth Index gained 1.1% and the Fundamental Value Index – also part of the equity hedge sub-strategy - fell 0.7%.

Kenneth J. Heinz, president of HFR, said realized volatility across asset classes had reached multi-year highs due to ongoing trade and tariff negotiations.

“In this environment, multi-strategy hedge funds are well positioned to preserve capital, as well as monetise opportunities created by these dislocations. In this volatile environment, it is likely that these funds will continue to lead industry performance as investors look to reduce equity market beta in favor of opportunistic long-short exposures.”

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