NEW YORK, Jan 9 (Reuters) – Hedge funds final yr posted their worst efficiency since 2018, primarily dragged down by equities as portfolio managers struggled to position their bets amid market turmoil, trade information supplier HFR mentioned on Monday.
General, hedge funds fell 4.25% final yr, in keeping with the HFRI 500 Fund Weighted Composite Index, which tracks most of the largest world hedge fund performances.
Fairness hedge funds notched the worst efficiency in 2022 among the many 4 fundamental hedge funds classes tracked by HFR. Nonetheless, their 10.37% loss nonetheless managed to beat the S&P 500 (.SPX)
, which fell 19.4% in its worst yr since 2008.
Occasion-driven hedge funds, together with people who guess on firm mergers or restructurings, and relative worth funds, which commerce on asset value dislocations, additionally ended the yr with losses of 5.04% and 0.9%, respectively.
Crypto hedge funds tanked 55.08%, after posting optimistic returns in solely three months of the yr. Regardless of their huge losses, crypto hedge funds account for a tiny a part of the trade’s $3.8 trillion in belongings.
Whereas fairness and crypto portfolio managers confronted challenges final yr, hedge fund traders discovered vivid spots to get return. Macro hedge funds outperformed the trade, HFR confirmed. The HFRI Macro Index rose 9.31%, primarily pushed by commodities, quantitative and pattern following methods, the information supplier mentioned.
“Traders must look underneath the floor to grasp the trade efficiency final yr. Lengthy-short hedge funds are the largest asset-weighted a part of the trade,” mentioned Patrick Ghali, managing companion of hedge fund advisory agency Sussex Companions. “General, I consider it was a superb yr for hedge funds.”
Macro hedge funds commerce globally a broad vary of belongings, reminiscent of bonds, currencies, charges, shares and commodities. This allowed them to well place their bets amid asset value dispersion brought on by rising rates of interest and surging inflation.
Reuters reported earlier this yr that traders think about macro hedge funds are likely to outperform the industry once more this yr, as a risky setting for markets persists.
Final yr’s turmoil additionally proved to be good for multi-strategy hedge funds, that are allowed to commerce throughout completely different belongings and markets. Kenneth Griffin’s Citadel posted positive factors of 38.1% in its flagship fund Wellington, whereas D.E Shaw’s Composite Fund went up 24.7% and Millennium rose 12.4%.
Reporting by Carolina Mandl, in New York
Enhancing by Chris Reese and Lincoln Feast.
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