News & Events

Hedge Fund Performance Commentary

The Eurekahedge Hedge Fund Index was down 4.77% in March1 , outperforming the underlying equity market as represented by the MSCI ACWI IMI (Local), which lost 13.99% over the month. Global equities were under pressure from the market sell-offs throughout most of the month, before recouping some of their losses later on. The COVID-19 outbreak continued to worsen globally, with the United States overtaking China as the country with the highest number of confirmed cases. US authorities were forced to implement stringent social distancing measures in an attempt to flatten the outbreak curve, resulting in increasing unemployment rate and slowing economic growth as businesses deemed non-essential were forced to temporarily cease their operations. Stimulus packages and an emergency rate cut were implemented during the month, with the aim of supporting the economy and increasing market liquidity. The US equity benchmarks recorded their worst quarterly performance since 1987, as they ended the month of March with double-digit losses – the DJIA and S&P 500 were down 13.74% and 12.51% respectively. In the same vein, European equities performed poorly as the coronavirus outbreak situations worsened in the region, turning it into the new epicentre of the pandemic. The CAC 40 and the DAX plummeted 18.01% and 16.44% respectively throughout the month of March. On the other hand, Chinese equity markets outperformed other regions as Mainland China is on track to ease its months-long lockdown. The Shenzhen and Shanghai Composite indices were down 7.54% and 4.51% respectively in March. Contrary to the relative underperformance of the region’s equity market, fund managers focusing on North America were down 4.91%, topping their Asia ex-Japan and European peers who were down 8.44% and 6.48% respectively over the month.

Approximately 31.6% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in March, and 10.3% of the fund managers in the database were able to generate double-digit returns over the first three months of 2020. Preliminary estimates showed that 81.8% of the hedge fund managers were able to outperform the global equity market in March, exemplifying the downside protection afforded by hedged strategies as opposed to long-only portfolios.

Figure 1: March 2020 and February 2020 returns across regions

The figure below illustrates the 2020 performance of hedge fund managers across regions. All regional mandates were down for the year, despite the positive geopolitical development surrounding the US-China trade negotiations in January. The escalation of the COVID-19 outbreak resulted in the weak performance of fund managers throughout the quarter. North American hedge funds led the pack with 7.48% loss over the first quarter of 2020, outperforming their peers focusing on Europe and Asia ex-Japan which slumped 8.69% and 9.29% respectively over the same period.

The full article is available in The Eurekahedge Report accessible to paying subscribers only.

Subscribers may continue to login as usual to download the full report and non-subscribers may email to enquire on how to obtain the full research report.

1 Based on 44.32% of funds which have reported March 2020 returns as at 14 April 2020