Hedge funds started 2021 by outperforming the global equity market, led by distressed debt and event driven strategies |
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The Eurekahedge Hedge Fund Index was up 0.37% in January 2021, outperforming the global equity market as represented by MSCI ACWI (Local) which gained 0.11% over the same period. Global equities went on a roller-coaster ride this month as their earlier gains were erased due to the turbulence of retail investment in the latter part of the month. In the US, Joe Biden's inauguration as the 46th president in the US, along with Democrats taking control in the Senate boosted the performance of the equity market in early January. Investors were optimistic about the proposed domestic stimulus and shift in the foreign policy of the new administration. However, market risk sentiment rapidly changed as the clash between retail investors and notable hedge funds over GameStop stock affected investors' confidence of the stability of the market. A group of retail investors in a trading community collectively bought GameStop shares which pushed its price to an extreme level. The massive buying squeezed the position of a notable hedge fund that bet against the company, resulting in them losing more than half of their assets under management. This incident forced brokers to place trading restrictions on the stock. The US equity benchmark erased the gains they generated in the earlier period of the month, with the DJIA and S&P 500 losing 2.04% and 1.11% respectively. Over in Europe, most of the equity benchmarks in the region were in negative territory, with the CAC 40 and DAX down 2.74% and 2.08% respectively. Returns were mixed across geographic mandates in January, with Asia ex-Japan and North American hedge funds gaining 2.09% and 0.79% respectively, while European hedge funds were down 0.34%. Across strategies, distressed debt, event driven, and long/short equities fund managers were up 1.12%, 1.01%, and 0.77% respectively throughout the month. Roughly 53.4% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in January, and 57.4% of the hedge fund managers in the database were able to outperform the global equity market as represented by the MSCI ACWI. |
Below are the key highlights for the month of January 2021 |
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Index of the Month | Jan 2021* |
2020 Returns | 2019 Returns |
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Eurekahedge Greater China Hedge Fund Index | 3.05 | 35.72 | 16.62 |
Main Indices
Main Eurekahedge Indices | Jan 2021* |
2020 Returns | 2019 Returns |
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Eurekahedge Hedge Fund Index | 0.37 | 12.11 | 9.04 |
Eurekahedge Fund of Funds Index | 0.56 | 11.90 | 8.71 |
Eurekahedge Long-only Absolute Return Fund Index | 1.17 | 13.14 | 16.44 |
Eurekahedge Islamic Fund Index | 1.05 | 10.21 | 10.11 |
Regional Indices
Eurekahedge Regional Indices | Jan 2021* |
2020 Returns | 2019 Returns |
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Eurekahedge North American Hedge Fund Index | 0.79 | 15.21 | 9.42 |
Eurekahedge European Hedge Fund Index | -0.34 | 4.49 | 7.48 |
Eurekahedge Eastern Europe & Russia Hedge Fund Index | 4.11 | -2.60 | 19.40 |
Eurekahedge Japan Hedge Fund Index | 0.87 | 0.82 | 7.39 |
Eurekahedge Emerging Markets Hedge Fund Index | 1.10 | 16.73 | 12.69 |
Eurekahedge Asia ex Japan Hedge Fund Index | 2.09 | 23.03 | 11.98 |
Eurekahedge Latin American Hedge Fund Index | -1.98 | 4.36 | 15.15 |
North American fund managers recorded a 0.79% gain in January, outperforming their European counterparts who were down 0.34%. Some fund managers with short positions to equities benefitted from the market risk-off sentiment which occurred in the later period of the month due to the GameStop saga. In the same vein, Asian fund managers were up 1.42%, supported by the strong performance of the equity market in the region, with the Hang Seng up 3.87%.
Strategy Indices
Returns were positive across strategic mandates in January with distressed debt and event-driven mandates up 1.12% and 1.01% respectively, as the former was supported by the positive performance of high-yield bonds as seen on the 0.38% return of the US High Yield Master Index. On the other hand, long volatility and tail risk managers who claimed the top spot in 2020 fell to the bottom of the table, with their -0.54% and -0.18% return respectively.
Table 1: Strategy return map
Eurekahedge Strategy Indices | Jan 2021* |
2020 Returns | 2019 Returns |
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Eurekahedge Arbitrage Hedge Fund Index | 0.77 | 10.70 | 5.59 |
Eurekahedge CTA/Managed Futures Hedge Fund Index | -0.29 | 7.86 | 5.70 |
Eurekahedge Distressed Debt Hedge Fund Index | 1.12 | 7.44 | 4.24 |
Eurekahedge Event Driven Hedge Fund Index | 1.01 | 7.91 | 6.86 |
Eurekahedge Fixed Income Hedge Fund Index | 0.34 | 5.40 | 8.20 |
Eurekahedge Long Short Equities Hedge Fund Index | 0.77 | 17.55 | 11.84 |
Eurekahedge Macro Hedge Fund Index | 0.06 | 10.16 | 8.67 |
Eurekahedge Multi-Strategy Hedge Fund Index | 0.25 | 7.66 | 8.65 |
Eurekahedge Relative Value Hedge Fund Index | 0.35 | 8.89 | 4.96 |
CBOE Eurekahedge Long Volatility Hedge Fund Index | -0.54 | 25.41 | -10.87 |
CBOE Eurekahedge Relative Value Volatility Hedge Fund Index | -1.05 | 5.76 | -1.55 |
CBOE Eurekahedge Short Volatility Hedge Fund Index | -1.33 | -1.41 | 8.32 |
CBOE Eurekahedge Tail Risk Hedge Fund Index | -0.18 | 34.84 | -10.40 |
Eurekahedge Equity Long Bias Hedge Fund Index | 0.83 | 14.62 | 16.73 |
Eurekahedge Equity Market Neutral Hedge Fund Index | 0.09 | 3.35 | 1.91 |
Eurekahedge Trend Following Index | 0.69 | 10.92 | 6.44 |
Eurekahedge FX Hedge Fund Index | 0.27 | 1.44 | 0.93 |
Eurekahedge Commodity Hedge Fund Index | 0.69 | 9.23 | 6.94 |
Eurekahedge Crypto-Currency Hedge Fund Index | 30.96 | 200.61 | 15.56 |
Eurekahedge AI Hedge Fund Index | -8.41 | 11.24 | 6.29 |
Eurekahedge ILS Advisers Index | 0.34 | 3.51 | 0.92 |
Eurekahedge Global Hedge Fund Indices by Fund Size | Jan 2020* |
2020 Returns | 2019 Returns |
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Eurekahedge Small Hedge Fund Index (< US$100m) | 0.36 | 12.75 | 9.06 |
Eurekahedge Medium Hedge Fund Index (US$100m - US$500m) | 0.40 | 11.72 | 8.94 |
Eurekahedge Large Hedge Fund Index (> US$500m) | 0.26 | 6.80 | 8.93 |
Eurekahedge Billion Dollar Hedge Fund Index | -0.02 | 5.46 | 8.55 |
Eurekahedge Asset Weighted Indices | Jan 2021* |
2020 Returns | 2019 Returns |
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Eurekahedge Asset Weighted Index – USD | -0.41 | 4.38 | 6.97 |
Eurekahedge TOP100 Asset Weighted Index – USD | -0.65 | 1.49 | 6.89 |
Eurekahedge TOP300 Asset Weighted Index - USD | -0.51 | 3.05 | 7.09 |
Asia-Eurekahedge Indices | Jan 2021* |
2020 Returns | 2019 Returns |
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Eurekahedge Greater China Hedge Fund Index | 3.05 | 32.72 | 16.62 |
Eurekahedge India Hedge Fund Index | 0.41 | 19.73 | 2.93 |
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