Ahead of the release of Preqin’s 2017 Global Hedge Fund Report, the second instalment in this series provides an overview of the key events in the industry over the course of the second half of 2016. To view the previous instalment please click here.
* to 30 November 2016
- The pound hit a new 31-year low while, contrastingly, stock markets saw a recovery from the losses incurred in June with the S&P 500 reaching a record high.
- Amid this volatility, 45% of fund managers surveyed for Preqin’s Special Report: Hedge Fund Manager Outlook predicted that by the end of 2016 the Preqin All-Strategies Hedge Fund benchmark would be approximately 2-3%, however, it seems the benchmark performed better than expected, returning 7.25% in 2016.
- New Jersey State Investment Council announced in August that it had lowered its target hedge fund allocation from 12.5% to 6.0%, citing the need to reduce the amount of fees charged for its investments.
- The final day of August saw the announcement that the president of Brazil, Dilma Rousseff, had been impeached. Latin America-focused hedge funds gained 1.46% for the month, finishing August with a YTD return of 15.31%.
- Hedge funds returned 3.94% in Q3 2016, the best quarterly return since Q1 2013, outperforming the S&P 500 for the second consecutive quarter. The month also marked the seventh consecutive month of positive hedge fund performance.
- After 28 years in the hedge fund industry, Richard Perry announced that his New York-based firm, Perry Capital, would liquidate its funds and return capital to investors.
- October was a challenging month for the hedge fund industry, with both the Preqin All-Strategies Hedge Fund and CTA benchmarks posting negative returns of -0.09% and -1.20% respectively.
- As of October, CTAs had posted three consecutive months of negative returns, generating a loss of -3.54%, eroding the 3.80% gain made in the first seven months of the year.
- In November, Preqin released Q3 2016 Hedge Fund Asset Flows, showing that despite recording net investor outflows of $66.7bn in the year to October, the hedge fund industry had grown 2.9% from the beginning of Q1 2016.
- However, the hedge fund industry recorded further outflows in the final quarter of the year, with a net outflow of $101.6bn by the end of November 2016.
- During H2 2016 however, a larger proportion of respondents reported that Brexit had a positive impact on their performance (32%) rather than negative effect (21%).
To find out more about the 2017 Preqin Global Hedge Fund Report, take a look at our sample pages.