Hedge funds had a positive April, based on data from Eurekahedge, although they underperformed the benchmark MSCI ACWI Local index. The Eurekahedge Hedge Fund Index gained 2.16% last month, while its benchmark returned 3.53%. The S&P 500 was up 5.24% in April on the back of better-than-expected macroeconomic data and strong earnings.
Preliminary asset flow data shows that the global hedge fund industry saw $28.8 billion in performance-driven gains, paired with $20.1 billion in investor inflows. The industry stood at $2.339 trillion in assets under management at the end of April. In March, funds reported $10.1 billion in performance-based gains and $10.4 billion in redemptions. Year to date, hedge funds have racked up $66.3 billion in performance-driven gains and $24.2 billion in investor inflows.
Multi-strategy hedge funds are rolling along
Multi-strategy hedge funds have had a strong six months based on data from HFM Insights. The firm said its Multi-Strategy Composite Index was up 7.5% year to date at the end of April. The average multi-strategy fund returned 1.3% in April, continuing a trend of strength after a difficult start to the pandemic.
HFM's Multi-strategy Composite Index leads the global composite's 7.4% return year to date but trails over 12 months at 25.9%, compared to the multi-strategy index's 24.6% return.
Even though multi-strategy funds have been doing well, investors have preferred to allocate to other hedge fund strategies. HFM data shows that multi-strategy managers saw outflows last month, while the broader industry saw inflows of over $25 billion, according to its data. Last year, multi-strategy funds saw $20.6 billion in net outflows, which HFM said suggests some investors are still skeptical about the merits of the strategy.
Interestingly, HFM found that all investors planned to boost their allocations to multi-strategy funds in the first half of this year. The firm added that the data showing investors are lukewarm to the strategy is because some investors have been drawn to larger funds. HFM found that several brand-name multi-strategy firms have been aggressively adding employees in recent months after a long period of strong performance and inflows.
Other strategies also gained in April
The Eurekahedge Event Driven Hedge Fund Index gained 2.83% last month, marking its 13th straight positive return since April 2020. The firm said the recent increase in merger and acquisition activity contributed to the strategy's strong performance. The S&P Merger Arbitrage Index jumped 2.07% in April. Event-driven hedge funds are up 9.77% on a year-to-date basis, marking the highest return of all main hedge fund strategies.
The Eurekahedge Long Short Equities Hedge Fund Index returned 2.8% in April, the seventh straight month of positive returns. Eurekahedge said the equity market's strong performance drove strength in long/ short equity hedge funds last month. The S&P 500 was up 5.24% last month. Year to date, long/ short equity funds are up 8.82% after their best April year-to-date return since 2006.
The Eurekahedge Commodity Hedge Fund Index gained 4.9% last month, making it the highest-returning secondary strategy for the month. The S&P Goldman Sachs Commodity Index was up 8.23% in April, driving the strategy's return. On a year-to-date basis, commodity hedge funds have returned 7%. That marked their best April year-to-date return since 2006.
The Eurekahedge Crypto-Currency Hedge Fund Index was up 13.63% in April, outperforming bitcoin's 9.32% decline last month. Other cryptocurrencies like Ripple, Ethereum and Litecoin supported the strong performance of crypto hedge funds. Ripple gained 146.61%, while Ethereum was up 49.87%, and Litecoin gained 30.35% in April. Year to date, crypto hedge funds are up 142.62%, beating bitcoin's 85.13% return so far this year.
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May 30, 2021 at 10:46PM
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Multi-Strategy Hedge Funds Have Had A Strong Six Months - Forbes
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