Hedge Fund Returns Stay Positive but Performance Wanes in April – May 2013

Date: Tuesday, May 21, 2013
Author: Preqin

Preqin’s early hedge fund benchmarks show that average returns have just managed to remain in the positive, with hedge funds posting 0.5% on average in April. This brings the average year to date return to 3.67%; however this is down on the same period last year, when hedge funds returned 5.61%. All strategies were down on the previous month, with multi-strategy vehicles once again the worst performing, returning -0.15%, the strategy’s worst month since May 2012. Although the macro benchmark of 0.46% represents a comparatively small decline from the March average of 0.53%, macro funds continued to underperform other strategies, posting 2.01% for the year. Event driven funds are once again the top performers, with returns of 1.02% in April bringing the year to date average to 4.87%. Again, long/short vehicles were also key contributors to the benchmark, making 0.65% (+4.57 for the year so far). Long bias funds were once again the key drivers of long/short performance, posting 2.55% on average.

After a strong finish to Q1 2013, US-focused vehicles returned a disappointing -0.03% in April. Asia-Pacific-focused hedge funds were re-instated as best performing region for the third month this year (+3.42%). This brings the year to date average for the region to 10.29%, easily exceeding the 6.87% average return over the same period last year. All other regions performed modestly, with none achieving average returns of over 1% in April.

UCITS hedge funds were also down on the previous month, with returns of 0.38% making it the lowest of Preqin’s early benchmarks. Relative value UCITS funds were key contributors, posting 0.81%, the second highest return since February 2012. Macro-focused UCITS funds posted 0.06% in April, bringing the strategy back to positive returns for the first time since January.

Expectedly, Preqin’s funds of hedge funds benchmark also slipped in April, down to 0.49% from +0.89% in March. Long/short funds were once again strong performers, posting on average 0.77% (+4.91% for 2013 to date). CTA funds, which are typically less correlated to the markets, returned 0.49% on average, compared to 0.52% the previous month. This brings average year to date returns to 1.28%. CTAs have experienced a far better start to the year than last year, when the average return was 0.05% for the first four months of the 2012.