The Eurekahedge Hedge Fund Index was up 2.16%1 in April, supported by the robust performance of the global equity market as represented by the MSCI ACWI (Local) which gained 3.53% over the same month. Strong corporate earnings and better than expected macroeconomic data acted as a tailwind to the performance of the equity market over the month. As fears of the COVID-19 pandemic’s impact on the recovery of the US economy lingered, the Federal Reserve reassured the market that monetary policy will be kept accommodative until the economy has made sufficient progress towards a recovery. The yield of the 10-year Treasury Note declined by 12 bp, causing a rally in interest rate sensitive tech stocks during the month. The NASDAQ Composite was up 5.40% in April, significantly outperforming the DJIA which was up 2.71% over the same period. Over in Europe, the European Central Bank made similar reassurances to provide lasting support to the economy which boosted investors’ confidence. The CAC 40 and DAX gained 3.33% and 0.85% in April respectively, bringing their 2021 return into double-digit territory. Returns were mostly positive across geographic mandates in April with North American and Asia ex-Japan hedge funds gaining 2.96% and 2.49% respectively while Japanese hedge funds were down 1.21%. Across strategies, event driven and long/short equities outperformed their strategic peers with returns of 2.83% and 2.80% respectively throughout the month.
Roughly 80.3% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in April, and 24.0% of the hedge fund managers in the database were able to maintain a double digit return in 2021.
Figure 2 illustrates the 2021 performance of hedge fund managers across regions. As of April year-to-date, all of the geographic mandates have recorded positive returns. Global hedge funds registered their best April year-to-date return since 2006 as they returned 6.99%, supported by the US$1.9 trillion economic stimulus package rolled out by the Biden administration as well as the continued speedy rollout of COVID-19 vaccinations. North American hedge funds outperformed their regional peers with their 9.61% return, followed by European hedge funds which returned 5.33%. At the other end of the spectrum, Latin American hedge funds lagged behind the group with a return of 0.95% as their returns were negatively impacted by the poor performance of the Latin American equity market, with the MSCI EM Latin America Index IMI (Local) returning 0.60% over the first four months of 2021.
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