Written by Preqin

Three months of positive performance drive best opening quarter of a year since 2013.

2017 Hedge Fund Letters

The hedge fund industry continued its positive start to the year with another month of gains in March. The Preqin All-Strategies Hedge Fund benchmark recorded returns of 0.68% through the month, building on gains of 1.01% and 1.46% in February and January, respectively. Q1 2017 performance now stands at 3.18%, which marks the best opening quarter performance since 2013, as hedge funds sustained their recent strong performance. With just one month of losses recorded since February 2016, the industry has now returned 11.61% over a 12-month period.

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Hedge Funds – Other Key Q1 2017 Performance Facts:

• Event driven and equity strategies posted Q1 returns of 4.18% and 4.06 respectively, the highest of any leading strategy.
• All leading strategies delivered gains through the quarter, but relative value strategies posted the lowest returns in Q1 of 1.06%, after the strategy also recorded the smallest gains in 2016.
• CTAs have experienced a mixed performance of late after a troubled year in 20 16, and losses of 0.18% in March contributed to Q1 returns of -0.36%.
• Activist hedge funds continue to deliver robust returns with Q1 gains of 3.30%, while volatility funds are also delivering in a climate of uncertainty and recorded Q1 performance of 3.32%.
• Despite suffering losses of 0.35% in 2016, funds of hedge funds rebounded in the opening quarter to post gains of 2.20%.
• Hedge funds larger than $1bn posted the highest gains of any size classification in Q1 (+3.98%), although emerging- (+3.27%), small- (+2.55%) and medium-sized (+2.91%) hedge funds all recorded positive performance.
• Asia-Pacific-focused funds gained 4.82% in Q1 2017 and emerging markets-focused hedge funds returned 3.82%.

Amy Bensted, Head of Hedge Fund Products:

“Performance concerns within the hedge fund industry and anxieties surrounding wider economic uncertainty have troubled investors in the asset class over the past year. However, hedge fund managers have delivered strong returns over this period, posting gains in 11 of the past 12 months and recording their strongest opening quarter to a year since 2013.

Hedge funds across all leading strategies, geographies and size classifications have shared in this positive start to 2017; this strong performance across the board is crucial at a time when investor scrutiny is intense. The key to attracting investor capital back into the industry over the remaining three-quarters in the year is likely to be maintaining these returns and dealing with concerns over fees, but hedge fund managers will now be able to point to the strength of recent performance as an incentive for investors.”