Hedge Funds Make Small Gains in February but CTAs Decline – March 2013

by Joanna Hammond

  • 21 Mar 2013
  • HF

After a strong start to 2013 the momentum of hedge funds slowed in February, with Preqin’s preliminary benchmarks indicating that an average return of 0.39% was posted for the month. Long/short hedge funds posted 0.65% to bring their return to 3.86% for the year to date. Long bias funds were once again the main contributors to this benchmark, posting 1.65% in February as equity markets continued to rise. Fixed income arbitrage vehicles (+0.45%) were the primary drivers of relative value fund returns (+0.40%) as equity market neutral funds made modest gains of (+0.21%). Event driven funds returned 0.42% to record their lowest month since July 2012 and multi-strategy vehicles posted preliminary February returns of 0.35%.

Despite relatively flat overall performance, macro was the only hedge fund strategy to post a loss for the month, returning -0.19% in February. This continues the strategy’s underperformance against other benchmarks and represents its lowest monthly return since May 2012. Preqin’s CTA benchmark was the worst performing in February, generating -1.69% to undo the 1.66% return made in January.

Asia-Pacific was the top performing region again in February according to Preqin’s early benchmarks, making 2.18% last month as Japanese stocks continued to rise. Emerging markets-focused funds made a slight loss of -0.08% in February, ending a run of eight consecutive months of positive returns. Europe-focused funds, which were the worst performing in January, had a more successful February, gaining 1.24% on average. North America-focused vehicles made 0.61% last month.

UCITS hedge funds were also unable to match January’s gains, posting 0.27% in February compared to 1.98% during the previous month. As with non-UCITS hedge funds, long/short funds were the key contributors, gaining 0.63%. Macro UCITS funds are down for the year to date (-0.33%) after recording a return of -0.86% in February. Funds of hedge funds started 2013 with their strongest month since 2010 but February saw average returns of just 0.05%.

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