Hedge fund indexes soar in April

The hedge fund industry experienced its strongest monthly gain in more than a decade in April, according to research provider HFR, which reported a gain in its composite index of 4.8% for the month. The gains come as managers are positioned for the re-opening of global economies which have been shut down due to the COVID-19 pandemic. Hedge fund portfolio manager also had to navigate historic volatility in oil and commodity markets. The strategies leading the surge were equity hedge, event-driven, energy/basic materials and activist strategies. The investable HFRI 500 Hedge Fund Composite Index gained 4.3% for the month, improving YTD performance to -5.3%. The top-decile performers were up 19.7% for the month, as gains in equity hedge strategies led to index gains of 6.8% thanks to recoveries in energy/basic materials and fundamental value sub-strategies. In the case of event-driven the gains of 6.4% come on the back of the strategy’s worst performing month ever in March. April’s monthly gains were not the only stats busting previous records made during the global financial crisis. In March, hedge funds saw their largest quarterly outflows since investors redeemed in the second quarter of 2009. HFR reported that hedge fund industry assets fell back below $3 trillion at the end of first quarter of 2020 with a decline of $366 billion of which $33 billion was in investor outflows with the remaining $333 billion being performance-based losses. Perhaps hedge funds proved their worth last month as only macro and relative value indexes reported losses. For the year to date, long/short equity funds and macro/CTA portfolios remain positive, according to HFR figures. “While the April recovery was both strong and broad-based, managers are actively positioning for both continued, high-realized volatility as well as the expanded opportunity set for long/short investing, encompassing trading through the current pandemic conditions and adjusting for the post-pandemic environment,” said Kenneth Heinz, president of HFR. “It is likely that the state of macroeconomic trading and investing will remain volatile and fluid in coming months, creating dynamic opportunities for managers to generate outperformance through the remainder of the year," he added.

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