Research

Hedge Fund Performance Commentary

Introduction

2017 ended positively with much pomp and was a strong year for global markets. Hedge funds closed the final month of the year in positive territory with the Eurekahedge Hedge Fund Index up 0.86%1 in December while the MSCI World Index2 finished the month up 1.19%. For 2017 as a whole, hedge funds were up 8.25%, while underlying markets as represented by the MSCI World Index returned 17.55% over the same period. Equity long-biased hedge funds have been the star performers for 2017 returning 16.85%, whilst long volatility and tail risk funds have ended at the bottom of the league tables, down 10.92% and 14.27% respectively. Roughly 35% of the fund managers have posted double digit returns in 2017, up from 19% in 2016. Ongoing political and economic events hold much uncertainty in store for 2018, but in the interim, tax cuts in the US are likely to provide a further boost to equity markets.

Figure 1: December 2017 and November 2017 returns across regions
 

 

All regional mandates ended the year on a positive note with Latin American managers topping the table, up 2.50%. Latin American mandated hedge funds reversed their two month losing streak to bounce back in December as equity markets had a good month, with the Brazilian IBOVESPA up 6.16%, largely on the back of oil price stabilisation as well as waning inflationary numbers which led to a reduction in interest rates in the region. Asia ex-Japan managers gained 1.41% followed by North American managers with gains of 0.97%. Japanese and European managers also ended the month in positive territory registering gains of 0.73% and 0.39% respectively.

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Footnote

1 Based on 48.05% of funds which have reported November 2017 returns as at 13 December 2017
2 MSCI AC World Index (Local)

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