Preqin’s preliminary benchmarks show that hedge funds started 2014 on a low note, posting net returns of -0.17% in January. However, not all hedge fund benchmarks generated negative returns for the month; developed markets-focused funds returned 1.01%, building on their 11.54% overall returns for the past 12 months. Funds targeting Europe and North America also saw better returns than most strategies, gaining 0.65% and 0.55% in January respectively.
The relative value benchmark was the top performing of Preqin strategy benchmarks in January, with average returns of 0.77%. Fixed income arbitrage funds were key contributors to this, posting 1.60%, followed by strong returns from relative value arbitrage vehicles at 1.43%.
Long/short strategies struggled to post strong returns as a result of a decline in equity markets, with an average of -0.47% in January. However, preliminary figures suggest that long/short credit vehicles performed well, returning 0.58%, which is the seventh consecutive monthly gain for the strategy. Long bias vehicles averaged -1.45%, which brings their 12-month returns down to 10.80%.
Early benchmarks for CTAs show that they started the year with a disappointing average return of -1.08% in January, with these funds unable to build on a positive Q4 of 2013. North America-focused CTAs performed well with returns of 1.47%, while developed markets vehicles struggled with average returns of -1.65%.
Funds of hedge funds also started 2014 on a downturn, returning -0.57% in the first month of the year. Positive returns were seen by Europe-focused funds of hedge funds, with these funds posting an average of 0.22%. Long/short funds of hedge funds (-0.57%) and macro funds of hedge funds (-1.27%) both started the year in the red.
UCITS funds reporting to Preqin also suffered a decline to start the year, with the average UCITS fund down 0.41% in January. Despite posting positive performance in 2013, long/short UCITS funds fell 0.76% in January, comparing unfavourably to relative value strategies, which were completely neutral with average returns of 0.00%. UCITS vehicles with a focus on emerging markets performed poorly, posting -2.92%, bringing their 12-month return total to -3.48%.