Hedge funds suffer worst quarter performance since 2008

16 Apr, 2014

Hedge funds have suffered their worst first quarter performance since 2008 with the average manager up just 1.23%, according to data from Preqin.

Data from Hedge Fund Research also indicates managers are struggling with the average hedge fund up a mere 1.11%. This is in marked contrast to 2012 and 2013 when hedge funds delivered gains of 6.07% and 3.76% respectively. The best performing strategy so far in 2014 has been event driven with gains of 2.94% while macro continues to underwhelm with returns of 0.51%.

Long/short equity is the most popular strategy and was included in 68% of investor searches. It also comprised 53% of all fund launches in the first quarter. Funds of hedge funds represented a higher proportion of launches accounting for 12% of new funds. The asset class appears to be enjoying something of a renaissance with 66% of investors confirming they were looking to allocate into funds of hedge funds, added Preqin.

Commodity Trading Advisors (CTAs) continue to see red with losses of 0.13%. Nonetheless, there was a five percentage point increase in the proportion of investor searches targeting CTAs between the fourth quarter of 2013 and the first quarter of 2014.

“Despite the volatile start to the year, investors look set to stay the course with hedge funds in the short term as fund searches continue to be issued for the year ahead.  The industry will be waiting to see how the second quarter of the year unfolds, not only in terms of performance, but also in how investors and fund managers react to the changing market conditions both in terms of new capital flowing into the asset class, and what funds pick up these inflows,” said Amy Bensted, head of hedge fund products at Preqin. 

PreqinHedge Fund Research