Research

Hedge Fund Performance Commentary

Introduction

Hedge funds started the year on a positive note, up 0.87% during the month of January. Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) gained 1.49% over the same period. Among regional mandates, Latin American hedge fund managers topped the tables, gaining 3.73% while event driven managers posted the best returns, up 2.02% among strategic mandates. Financial markets were still hinged on the developments post-Trump inauguration with US equity markets trading higher at the start of January on the back of encouraging US macro data. The flow of economic data from major economies outside of the US has also signalled an encouraging outlook on the global economy. However, this still has to be taken with a pinch of salt as we are yet to see the full impact of Trump’s protectionist policies on America’s trade partners. While there are understandable jitters on an ‘America First’ rhetoric, Trump could be treading political sensitivities too precariously.

Figure 1: January 2017 and December 2016 returns across regions
 

 

All regional mandates were in positive territory during the month, with Latin American mandated hedge funds topping the table, up 3.73%. Latin American equity markets performed strongly in January with the Ibovespa Index gaining 7.38% for January, supported by the rally in underlying Brazilian metals companies following news on the Chinese steel cut productions. Asia ex-Japan managers were also up posting gains of 1.93%. This is followed by Japan mandated hedge funds which were up 1.19%. North American and European mandated hedge funds were also up in January with gains of 0.94% and 0.56% respectively.

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