Hedge Fund Performance Commentary

The Eurekahedge Hedge Fund Index was up 4.50%1 in November 2020, supported by the strong performance of the global equity market as reflected by the 11.63% return of the MSCI ACWI2 during the month. Global equities ended the month in strong positive territory due to the relatively smooth conclusion of the US presidential election and the announcement of three vaccines that are effective against COVID-19, eclipsing worries about the near-term economic outlook. Despite the reimposition of restrictive lockdown measures across many European countries to curb the increasing number of new COVID-19 infections, European stock indices rallied strongly as news of the better than expected efficacy of several vaccine candidates led to optimism that the worst of the pandemic could soon be over. The FTSE 100 and DAX Index rebounded strongly in November, gaining 12.35% and 15.46% respectively, outperforming their peers in North America and Asia. Over in the US, the successful election of Joe Biden as the 46th president of the United States drove a risk-on mood in markets as investors looked forward to greater certainty and a more diplomatic and multilateral approach in foreign policy matters. The DJIA gained 11.84% in November, reversing its 2020 return into positive territory, while the tech-heavy NASDAQ was up 11.80% which extends its year-to-date return to 35.96%. Returns were mostly positive across geographic mandates in November. Fund managers focusing in North America were up 6.46%, outperforming their Asia ex Japan and European peers who returned 5.41% and 4.27% respectively. Across strategies, long/short equities, event driven and relative value hedge fund managers were up 6.88%, 6.06% and 5.90% respectively throughout the month.

Roughly 81.8% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in November, and 31.5% of the hedge fund managers in the database were able to maintain double-digit returns over the first 11 months of 2020.

Figure 1: November 2020 and October 2020 returns across regions

Figure 2 illustrates the 2020 performance of hedge fund managers across regions. Despite the sharp sell-off in the first quarter of 2020 which was the worst quarterly performance for global hedge funds since inception due to the spread of COVID-19, most regions have recovered from their deep losses as the global equity market exhibited a strong rebound since the second quarter of the year, supported by the easing economic policies and encouraging progress of vaccine development. Asia ex-Japan hedge funds claimed the top spot by recording 18.94% return, thanks to the strong performance of the Asian equity market particularly in the Chinese region. In the same vein, North American hedge funds followed behind with their 11.13% return, driven by the strong rally of US equities since end-March. On the other end of the spectrum, European and Japanese hedge funds lagged behind the group as they registered 1.85% and -2.13% return as of November 2020 respectively.

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1Based on 42.60% of funds which have reported November 2020 returns as at 10 December 2020
22 MSCI ACWI (Local)