The Eurekahedge Hedge Fund Index was up 2.03%1 in May, supported by the robust performance of the global equity market as represented by the MSCI ACWI (Local), which gained 4.32% over the same month. Global equities continued its rally driven by the reopening of major economies and accommodative central bank policies. For the week ending May 15, the market saw a decline in risk assets owing to concerns regarding the second pandemic wave and fresh tension between the US and China, pushing the S&P 500 down 2.26%. However, market risk sentiment shifted towards the end of the month, supported by investors’ optimism on strong economic recovery as some countries particularly in Europe and the US began to ease their lockdown. The US equity benchmark ended the month with strong returns, with the tech-heavy NASDAQ up 6.75% - recording a new all-time high, while the S&P 500 was up 4.53% over the same period. In the same vein, European equities benefited from the market risk-on sentiment, as France and Germany unveiled a half-trillion fiscal stimulus package to help EU countries which have been worst hit by the crisis. The DAX and CAC 40 gained 6.68% and 2.70% throughout the month of May. Over in Asia, the mounting trade tension between the US and China, on top of the political conflict in Hong Kong weighed on the performance of Chinese equities. The Hang Seng and CSI 300 were down 6.83% and 1.16% over the month. Returns were mostly positive across geographic mandates in May, with fund managers focusing on North America up 2.88%, outperforming their European and Asia ex Japan peers who were up 1.76% and 1.72%, respectively. Across strategies, long/short equities, event driven, and fixed income fund managers were up 2.90%, 2.43% and 2.22% respectively throughout the month.
Roughly 72.6% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in May, and 13.2% of the hedge fund managers in the database were able to maintain double-digit returns over the first five months of 2020.
Figure 1: May 2020 and April 2020 returns across regions
Figure 2 illustrates the 2020 performance of hedge fund managers across regions. All regional mandates were down for the year, driven by the escalation of the COVID-19 outbreak which resulted in massive sell-offs in the global equity market in February and March. North American hedge funds led the pack with 1.97% loss over the first five months of 2020, outperforming their peers focusing on Asia ex-Japan and Europe which slumped 2.28% and 5.82% respectively over the same period.
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