Event Driven Hedge Funds Outperform other Strategies in March – May 2013

Date: Wednesday, May 8, 2013
Author: Joanna Hammond, Prequin

Preqin's hedge fund performance benchmarks showed signs of improvements over March, with hedge funds posting an average return of 0.74% for the month, up from 0.14% in February. Event driven funds outperformed other strategies, with average returns of 1.27% in March. Across the first quarter, event driven funds were the top-performing strategy, posting 3.84% on average. Long/short funds also maintained their positive start to the year, with average returns of 0.79% in March. Long/short vehicles posted returns of 3.82% over the first quarter of the year, largely driven by a strong January in which the Preqin benchmark recorded returns of 2.91% across the long/short sector. With continued growth in equities markets, long bias vehicles were once again the lead contributors to this benchmark, posting 1.35% in March.

Preqin’s fund of hedge funds benchmark also showed gains on the previous month, from 0.35% in February to 0.89% in March. Event driven and long/short funds of hedge funds were expectedly the key contributors to this benchmark, with both strategies returning an average of 1.09% in March.

Macro hedge funds, which had underperformed other strategies in early 2013, performed slightly better in March, returning an average of 0.75% to exceed the benchmark for the first time this year. Macro funds were the worst-performing in the first quarter on 2013, returning 1.65%, almost half that of Preqin’s quarterly performance benchmark (+3.16%). Multi-strategy vehicles saw a more modest improvement in March, with average returns of 0.30% for the month, and 2.54% for 2013 to date. Relative value was the only strategy that failed to improve on the previous month’s return, posting 0.57% for the second month in a row to make an average of 2.33% in the year to date.

March’s rally on US stocks helped North American hedge funds post gains of 1.65% for the month, a notable increase from February’s average return of 0.17%. The Asia-Pacific region maintained its strong start to the year, posting 1.58% in March, and was the top-performing region in Q1 2013, with average returns of 6.85%.