Hedge Funds Fail to Stay in Positive Territory in August 2013 - Preqin’s Preliminary Benchmarks

Date: Wednesday, September 18, 2013
Author: Preqin

Preqin’s early benchmarks show that hedge funds, across all strategies and regions, are struggling to maintain the same consistent gains as seen earlier this year and were unable to remain in positive territory last month. A loss of 0.09% for August brought the industry’s year to date return to 5.36%. This is the second time this year that single-manager hedge funds have declined into negative territory, after a return of -1.60% in June saw hedge funds end a year-long positive streak. However industry observers still have reason for optimism, as last month’s minor loss brings the benchmark return over the past 12 months to a healthy 9.69%, compared to 4.04% for the same period last year.

According to Preqin’s preliminary benchmarks, single-manager hedge funds employing event driven strategies posted the only positive return across all major strategies in August, at an average of 0.44%, bringing the strategy’s year to date return to 9.34%. Long/short strategies beat the overall industry benchmark last month too, posting a small loss of 0.04% in August following gains of 2.16% in July. This contributes to a return of 6.41% so far in 2013. Multi-strategy and relative value strategies both underperformed and fell below the benchmark in August, with the strategies seeing losses of 0.58% and 0.44% respectively. Single-manager hedge funds with a focus on developed markets remained in positive territory, returning 0.38% for August, and funds with a North American and European focus also posted small but positive returns of 0.03% and 0.02% respectively. Funds with an Asia-Pacific focus saw a loss of 0.62%, despite being the best performing region over the past 12 months (+16.64%).

Funds of hedge funds suffered losses across all regions and strategies tracked by Preqin, returning an average of -0.58% to record a second negative month this year. Long/short multi-manager hedge funds posted -0.42% for the month to bring the year to date performance to 5.48%. Multi-strategy funds of hedge funds saw a loss of 0.60%, taking returns to 3.18% for the year so far.

UCITS funds reporting to Preqin also declined into negative territory for August, declining 0.30%. Despite strong performance over the last 12 months, long/short UCITS funds fell 0.63% and compared unfavourably to relative value strategies, which gained 0.14%. Macro-strategy UCITS funds posted -0.01% and the sector remains in negative territory this year at -2.31%. UCITS vehicles with a focus on emerging markets performed poorly in August, posting -1.77% on average and -3.68% for the year to date.

Preqin’s early benchmarks saw CTAs continue to decline, posting a loss of 0.47% in August, its highest return since April 2013. This brought year to date performance to -2.53% compared to 3.15% for the same period last year.