Blog

2016 Hedge Fund Industry Recap – H1

by Christopher Beales

  • 12 Jan 2017
  • HF

In this two-part series we take a look at issues that have impacted fund performance, headline investor news and how hedge fund assets have transformed over this period.

January

  • The S&P 500 Index experienced its worst 10-day start to a year on record, the FTSE 100 Index recorded its weakest first week since the turn of the century and China’s stock markets were suspended.
  • The Preqin All-Equity Strategies Hedge Fund benchmark’s January return of -4.29% represents the benchmark’s lowest monthly return since September 2011.
 

February

  • February’s issue of Hedge Fund Spotlight reported that nearly three-quarters (72%) of fund managers surveyed by Preqin predicted that the industry’s assets would grow over the course of the year.
  • Over the first three-quarters of 2016, the industry’s assets have indeed increased 2.9% from December 2015 to $3.2tn, despite recording net investor outflows of $66.7bn as improved performance increased the value of hedge fund holdings.
 

March

  • March saw significant trend reversals with oil prices recovering from the lows seen in February and the S&P 500, Hang Seng and DAX indices all posted strong monthly gains.
  • The Preqin All-Strategies CTA benchmark posted -1.08% in March after returning 2.66% over the first two months of 2016, while the Preqin All-Strategies Hedge Fund benchmark returned 2.40% in March, the highest single monthly performance since January 2013.
 

April

  • Preqin’s April US Public Pension Funds Update report showed that since 2010 the average allocation to hedge funds of US-based public pension funds as a percentage of total AUM has increased annually, with the exception of 2012.
 

May

  • May’s Hedge Fund Spotlight covered the ‘$1bn Club’ – hedge fund managers with $1bn or more in AUM. The $1bn Club accounts for 12% of all hedge fund managers, yet represents 88% of hedge fund industry assets.
  • May saw $1bn Club member Tudor Investment Corporation announce that the fees charged to a share class in one of its biggest funds were being reduced by 50bps and 200bps to 2.25% and 25% respectively.
 

June

  • On the 23 June, the UK voted to leave the EU. Within 24 hours, over $2tn in global stock value was lost, the value of the pound against the US dollar dropped to 31-year low and credit rating agencies downgraded the UK’s rating.
  • While Europe-focused hedge funds were the most affected, returning -2.93% in June, hedge funds focused on other regions limited their downside, with the Preqin All-Strategies Hedge Fund benchmark returning 0.03%. 

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