Hedge funds report strongest gains since 1999

Riding the tailwinds of strong corporate earnings with a heaping dose of investor optimism, hedge fund strategies saw healthy gains last month, with data/index provider HFR declaring the year-to-date performance the best since 1999.

HFR President Kenneth Heinz (provided)

The HFRI Fund Weighted Composite Index gained 2.7% during the month, while rising to 8.7% in year-to-date returns. In the trialing seven-month timeframe, the index has surged 20.5% that is on par with gains last seen in March of 2000.

“Hedge funds extended record 2021 performance in April, including gains trailing back to 2H20, with broad-based contributions across all strategies concentrated in Equity Hedge, Macro, Technology, Cryptocurrency and Special Situations, as strong corporate earnings combined with increasing optimism over the U.S.-led global economic reopening,” stated HFR President Kenneth Heinz.

Equity hedge strategies accelerated recent gains in April, as strong corporate earnings and optimism over the US economic reopening drove equities to record levels. The HFRI Equity Hedge (Total) Index surged 3.2% for the month, with strong contributions from a wide dispersion of sub-strategy performance led by the high-beta, long-biased Quantitative, Technology and Fundamental exposures.

For the year to date, equity hedge funds were up over 10% as were event-driven strategies. Cryptocurrency meanwhile continued to its vertical ascent with year-to-date gains of 262%. In total, all the hedge fund strategies tracked by HFR are firmly in positive territory for the year.

“Through the seven consecutive months of gains, hedge funds have navigated multiple market cycles (both positive and negative), including a new US political administration, unprecedented fiscal stimulus initiatives, additional virus mutations/variants, and a sharp increase in heavily shorted, deep value equities driven by retail trading platforms,” added Heinz. “It is likely that these powerful macroeconomic and geopolitical trends and risks will continue to evolve throughout 2021, creating opportunities for institutions to allocate to fund managers that are well positioned for this environment and that have demonstrated performance success over through recent periods of volatility.”

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