Research

Hedge Fund Performance Commentary

Introduction

Hedge funds ended their five-month winning streak, down 0.07%1 during June based on preliminary numbers for the month. The average return of the global hedge fund was pulled into negative territory in June as developed market mandates underperformed their emerging market peers, with trend-following and macro strategies lagging behind the pack. Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) were up 0.18% over the same period. Equity markets posted mixed results during the month, with European equities ending the month in the red whilst North American mandates posted modest gains. In contrast, emerging market equity mandates were the bright spot led by strong gains for Chinese equities. Concerns over tightening monetary policy in developed markets (sans Japan) weighted on market sentiment, though there was some support from positive macro numbers coming out from China where Q2 GDP growth appears to be holding steady.

Figure 1: June 2017 and May 2017 returns across regions
 

 

Among regional mandates, Japan mandated hedge funds topped the table for the month, gaining 1.58%, followed by Asia ex-Japan and European mandated hedge funds with gains of 0.93% and 0.74% respectively. Emerging markets hedge funds were also up 0.24% this month. On the other hand, Latin American mandated hedge funds posted the steepest decline, down 0.74% followed by their North American counterparts with losses of 0.27%.

On a year to-date basis, hedge funds are up 3.28% while underlying markets gained 7.45%. Asia ex-Japan hedge fund managers led the table up 7.91% followed by their emerging markets and Latin American counterparts with gains of 7.06% and 6.39%.

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Footnote
1Based on 50.04% of funds which have reported June 2017 returns as at 13 July 2017
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