eVestment: Q2 off to a good start for hedge funds
15 August 2018 London
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The second half of 2018 is off to a good start for hedge funds, according to investment data specialist, eVestment.
The broadly positive returns posted in July shows evidence investors may be feeling less rosy, it added in the report.
Given the ups and downs during the year so far, within the macro and managed futures group it is very likely that investor sentiment is questionable and low, respectively, said eVestment.
July did not help either group improve their standings. Large quantitative equity strategies appear to be satisfying recent investor allocations, and within credit markets distressed funds have emerged as an industry outperformer this year.
Hedge funds returned an average of 0.59 percent in July, and are up 0.79 percent for the first seven months of the year. Pockets of good performance are still being overshadowed at the aggregate level by underperformance from macro and managed futures products.
Nearly 63 percent of reporting products produced gains in July, reported eVestment which is “the second best reading of the year behind the 81 percent in January.”
Though eVestment said looking at the largest products, many of which had large inflows in the last two years, eight of ten declined in July.
eVestment added: “Their returns are still greater than the industry average in 2018, but have an average return of 1.30 percent. While that is better than a basic 50/50 equity/bond mix, it is only slightly and only half the group is outperforming.”
Larger macro strategies have been investor favourites in last year and this year, and for the most part this refined group had done relatively well, eVestment observed. In July, however, losses crept in for the second consecutive month.
“Now, more than half the group would be considered under-performing for the year and after redemptions emerged in June, the stage is set for some uncomfortable conversations toward the end of the year if relative improvement isn’t evident,” eVestment said.
Managed futures strategies are having troubles, and recent returns are not changing that perception. Products have produced aggregate losses in five of seven months of 2018, including three consecutive monthly declines through July.
Year-to-date returns for the largest products average near -6 percent, and redemptions have emerged and have been persistent.
There is a fair amount of dispersion among directional quant equity strategy returns, but for the most part funds took advantage of rebounding equities in July, said eVestment.
Contrary to managed futures, the largest products in this space are outperforming the majority of their peers by a good margin, an obvious positive for investor sentiment heading into H2 2018.
Brazil and India led the emerging market rebound in July. Of this eVestment said: “Both country exposures have a long way to go to dig out of their current drawdown, but returns in July are a step in the right direction. The two groups are still leading the industry to the downside after very good recent years.”
The report shows that losses accelerated within China-focussed strategies. Only one reporting China-focused product was able to post gains in July, but even in that apparent lone bright spot is actually leading its peers to the downside for the year, noted eVestment.
The broadly positive returns posted in July shows evidence investors may be feeling less rosy, it added in the report.
Given the ups and downs during the year so far, within the macro and managed futures group it is very likely that investor sentiment is questionable and low, respectively, said eVestment.
July did not help either group improve their standings. Large quantitative equity strategies appear to be satisfying recent investor allocations, and within credit markets distressed funds have emerged as an industry outperformer this year.
Hedge funds returned an average of 0.59 percent in July, and are up 0.79 percent for the first seven months of the year. Pockets of good performance are still being overshadowed at the aggregate level by underperformance from macro and managed futures products.
Nearly 63 percent of reporting products produced gains in July, reported eVestment which is “the second best reading of the year behind the 81 percent in January.”
Though eVestment said looking at the largest products, many of which had large inflows in the last two years, eight of ten declined in July.
eVestment added: “Their returns are still greater than the industry average in 2018, but have an average return of 1.30 percent. While that is better than a basic 50/50 equity/bond mix, it is only slightly and only half the group is outperforming.”
Larger macro strategies have been investor favourites in last year and this year, and for the most part this refined group had done relatively well, eVestment observed. In July, however, losses crept in for the second consecutive month.
“Now, more than half the group would be considered under-performing for the year and after redemptions emerged in June, the stage is set for some uncomfortable conversations toward the end of the year if relative improvement isn’t evident,” eVestment said.
Managed futures strategies are having troubles, and recent returns are not changing that perception. Products have produced aggregate losses in five of seven months of 2018, including three consecutive monthly declines through July.
Year-to-date returns for the largest products average near -6 percent, and redemptions have emerged and have been persistent.
There is a fair amount of dispersion among directional quant equity strategy returns, but for the most part funds took advantage of rebounding equities in July, said eVestment.
Contrary to managed futures, the largest products in this space are outperforming the majority of their peers by a good margin, an obvious positive for investor sentiment heading into H2 2018.
Brazil and India led the emerging market rebound in July. Of this eVestment said: “Both country exposures have a long way to go to dig out of their current drawdown, but returns in July are a step in the right direction. The two groups are still leading the industry to the downside after very good recent years.”
The report shows that losses accelerated within China-focussed strategies. Only one reporting China-focused product was able to post gains in July, but even in that apparent lone bright spot is actually leading its peers to the downside for the year, noted eVestment.
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