The Eurekahedge Hedge Fund Index was up 2.16%1 in April, supported by the robust performance of the global equity market as represented by the MSCI ACWI (Local) which gained 3.53% over the same month. Better than expected macroeconomic data and strong corporate earnings boosted the performance of the equity market as the S&P500 returned 5.24% in April. The Federal Reserve reassured the market that monetary policy will remain accommodative to support economic growth amid lingering fears that the emergence of new variants of COVID-19 could lead to recurring waves of infections and derail the recovery of the global economy. This announcement led to a 12 bp decline in the yield of the 10-year Treasury Note, which caused a rally in interest rate sensitive tech stocks. The NASDAQ Composite was up 5.40% in April, significantly outperforming the DJIA which was up 2.71% over the same period. Over in Europe, the European Central Bank made similar reassurances to provide lasting support to the economy which boosted investors’ confidence. The CAC 40 and DAX gained 3.33% and 0.85% in April respectively, bringing their 2021 return into double-digit territory. Returns were mostly positive across geographic mandates in April with North American and Asia ex-Japan hedge funds gaining 2.96% and 2.49% respectively while Japanese hedge funds were down 1.21%. Across strategies, event driven and long short equities outperformed their strategic peers with returns of 2.83% and 2.80% respectively throughout the month.
Final asset flow figures for March showed that hedge fund managers recorded performance-based gains totalling US$10.1 billion counterbalanced by net investor redemptions of US$10.4 billion throughout the month. Preliminary data for April estimates that the global hedge fund industry witnessed US$28.8 billion of performance-driven gains combined with US$20.1 billion of net investor inflows. The assets under management (AUM) of the global hedge fund industry stood at US$2339.0 billion as of April 2021. The global hedge funds industry has seen US$66.3 billion of performance-based gains and US$24.2 billion of investor allocations throughout in 2021.
Key highlights for April 2021:
- Hedge fund managers were up 2.16% in April – supported by the strong performance of the global equity market as represented by the MSCI ACWI (Local) which gained 3.53% during the month. In terms of year-to-date return, global hedge funds registered their best April year-to-date return since 2006 with a return of 6.99%. Around 80.3% of the global hedge funds tracked by the Eurekahedge database posted positive returns in April, and 24.0% of the hedge fund managers in the database were able to maintain a double digit return in 2021.
- On an asset-weighted basis, hedge funds were up 2.48% in April, as captured by the Eurekahedge Asset Weighted Index – USD. In terms of year-to-date performance, the index is only up 3.50%, highlighting the struggles for some of the larger asset managers over the year.
- North American hedge funds gained 2.96% in April, outperforming their Asia ex-Japan and European peers who returned 2.49% and 1.47% respectively. In terms of year-to-date return, North American hedge funds have also performed the best as they have returned 9.61% over the first four months of 2021. In comparison, European and Asia ex-Japan hedge funds have returned 5.33% and 5.12% respectively over the same period.
- The Eurekahedge Event Driven Hedge Fund Index was up 2.83% in April, recording its thirteenth consecutive month of positive return since April 2020. The recent pick-up in activity of the merger and acquisitions space contributed to the strong performance of the hedge fund managers as seen in the 2.07% gain in the S&P Merger Arbitrage Index in April 2021. In terms of year-to-date return, event driven hedge funds are up 9.77%, recording the highest return among their main strategic peers.
- The Eurekahedge Long Short Equities Hedge Fund Index gained 2.80% in April, extending its streak of consecutive positive returns to 7 months. Long short equities hedge funds were supported by the strong performance of the equity market as the S&P500 gained 5.24% in April. In terms of year-to-date return, long/short equities hedge funds have returned 8.82%, recording their best April year-to-date return since 2006.
- The Eurekahedge Commodity Hedge Fund Index was up 4.90% in April, recording the highest return among secondary strategies over the month. Hedge fund managers utilising the commodity strategy were supported by the strong return of the S&P Goldman Sachs Commodity Index which gained 8.23% in April. In terms of year-to-date return, commodity hedge funds are up 7.00%, recording their best April year-to-date return since 2006.
- Fund managers focusing on cryptocurrencies were up 13.63% in April as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index, outperforming Bitcoin which lost 9.32% over the same period. Cryptocurrency hedge funds were supported by the strong performance of other cryptocurrencies such as Ripple, Ethereum and Litecoin which posted gains of 146.61%, 49.87% and 30.35% respectively in April. In terms of year-to-date return, cryptocurrency hedge funds have gained 142.62%, outperforming Bitcoin which posted a return of 85.13% over the first four months of 2021.
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