Introduction
The Eurekahedge Hedge Fund Index gained 0.89% in February1, bringing its year-to-date return to 3.26%. The risk-on sentiment among investors driven by the Fed’s patient stance and optimism over the potential resolution of the US-China trade tension persisted through the month, sending global equity markets on a rally through February. The MSCI AC World Index (Local) gained 3.03% during the month, resulting in 10.61% year-to-date return over the first two months of 2019. On the other hand, growth forecast cuts from developed economies’ central banks raised concerns over lower inflation, sending bond yields lower throughout the month.
Approximately 65.6% of the hedge fund managers tracked by Eurekahedge posted positive returns in February, and 12.8% of them managed to generate double-digit gains year-to-date. Managers utilising event driven and long/short equities strategies were best positioned to benefit from the upward movement in both equity and bond markets throughout January and February. The two strategic mandates were up 5.20% and 5.11% respectively as of 2019 year-to-date. On the other hand, CTA/managed futures hedge funds were up 0.16% despite the strong recovery seen in energy and industrial metal sectors over the past two months.
Most of the major geographic mandates were up in February, with Asia ex-Japan and North American managers gaining 2.60% and 1.50% respectively. Latin American fund managers on the other hand dipped 1.13%, as the region’s equity markets slumped due to weak GDP growth.
Figure 1: February 2019 and January 2019 returns across regions
Looking at year-to-date returns, Asia ex-Japan and North America mandates posted the strongest return thanks to the underlying equity markets’ performance during the month. The two mandates were up 5.14% and 5.05% respectively as of February 2019. Meanwhile, Europe and Japan lagged behind as slowing growth concerns weighed on fund managers’ returns.
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