Hedge funds set for best monthly returns since 2016
Hedge funds are currently on track to record their strongest monthly performance in more than a decade, successfully rebounding from a market downturn in March. According to the latest quarterly industry report from GOLDMAN SACHS GROUP INC, the recovery follows a period of volatility triggered by the conflict in Iran, which had previously dragged down global returns.
Data from the report indicates that stockpickers utilizing long and short positions have seen gains of 7.7% through the middle of April. This represents the most significant monthly return for these funds since tracking began in early 2016. On a year-to-date basis, equity long-short funds have posted returns of approximately 6.7%, with managers focused on Asia and China currently leading the market.
While the first quarter saw an average gain of 1.6% across all strategies, the industry faced a challenging March where macro traders dealt with widespread losses and a 1.8% decline. Despite these struggles, equity long-short hedge funds attracted their largest volume of inflows since 2022 during the first quarter. This influx suggests that limited partners and allocators remain bullish on professional money managers, even in the face of recent market turbulence.
During the volatility of March, hedge funds incurred only 35% of the losses seen in traditional portfolios weighted 60% toward stocks and 40% toward bonds. This performance was considered low relative to industry benchmarks. The report also highlighted a significant increase in return dispersion among individual funds, reaching a three-year high during the month. This gap between winners and losers coincided with increased market volatility. Furthermore, several specialized strategies delivered substantial alpha returns, or profits derived from a specific trading edge. Market-neutral funds rose by 10.3%, while those concentrated on the healthcare sector surged by 33.6%. Performance in the Asia region was also notably strong, with gains of 28.1%.
