CTAs Surge Ahead as 2014 Draws To a Close – December 2014

by David McKenna

  • 23 Dec 2014
  • HF

Preliminary figures from Preqin’s Hedge Fund Analyst database indicate that November will be the most successful month for CTAs for over three years, with Preqin’s CTA benchmark returning 3.41% for the month. This brings year-to-date performance to 8.48%, meaning 2014 looks sure to be the most successful year for these managers since 2010, when they generated 14.89%.

After two straight months of losses, Preqin’s All Hedge Funds benchmark recovered marginally in November, returning 0.70%. This brings year-to-date returns to an underwhelming 3.90%, comparing unfavourably to the same period last year which saw the benchmark generate 10.78%.

Relative value funds lead Preqin’s core strategy benchmarks in 2014 (+4.38%), with October representing the sole down month for these funds. A turbulent year for long/short vehicles has seen a return of 3.88%, with the strategy benchmark falling into the red across six different months. Performance of these funds in 2014 will almost certainly fall short of their 2013 return of 14.98%. Preqin’s multi-strategy and macro strategies benchmarks have posted 3.85% and 3.63% respectively in 2014 YTD, with macro funds’ November return of 1.13% representing their greatest monthly return since January 2013. The strategy has underperformed in recent years; macro managers will hope that 2015 brings greater volatility in their target markets. Preqin’s event driven strategies benchmark, the top performing core strategy in 2013 (15.38%), has delivered 1.85% so far in 2014.

By region, North America-focused managers have consistently led the way through 2014 and returned 5.33% in November 2014, with Asia-Pacific-focused funds surpassing this and generating 5.61% for the year so far. Despite recording 0.86% in November 2014, their greatest monthly return since February, Europe-focused funds lag some way behind this year with 2.51% in November 2014. Preqin’s Emerging Markets benchmark shows returns of 3.44% in 2014, with these managers struggling of late following three straight months of losses.

Preqin’s November multi-manager benchmark shows that funds of hedge funds have returned 3.40% so far this year. This compares very favourably with the performance of single-managers (+3.90%), although represents a fall compared with the same period in 2013 (+6.99%). Single-strategy fund of hedge funds have outperformed multi-strategy vehicles in 2014, with macro and long/short strategies returning 3.92% and 3.35% respectively in 2014 YTD, versus 3.14% for multi-strategy funds.

UCITS-compliant funds have returned 2.00% for the year through November and look unlikely to match their 2013 performance of 6.54%.  Multi-strategy UCITS funds have delivered the highest return for the year (+3.14%) of this type of fund, while Preqin’s UCITS event driven strategies benchmark is down in 2014 so far (-0.62%).

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