The industry started off 2017 with an average +1.16 per cent, with more than 70 per cent of hedge funds reporting positive results for the first month of the year, reports HedgeWeek.
In fact, despite some disappointing performance in a few hedge fund segments, industry results show the importance of using data and market insight to pick the right hedge funds and the importance of hedge funds to a balanced portfolio of investments.
Brazil focused hedge funds produced the strongest returns in January, coming in at +7.72 per cent. This follows exceptional +31.14 per cent returns in 2016 but disastrous -29.62 per cent returns in 2015, according to eVestment data, highlighting the tremendous upside and potential volatility in some hedge fund segments.
Funds focused on the other BRIC countries performed strongly in January, with Russia-focused funds returning +4.10 per cent, India-focused funds returning +4.21 per cent and China-focused funds returning +4.17 per cent. Overall emerging markets-focused funds returned +3.37 per cent in January.
Among primary strategies in January, Long/Short Equity and Distressed funds were among the stronger performers, returning +1.59 per cent and +1.57 per cent respectively.
Activist hedge funds, among the strongest performing segments in 2016 with +11.91 per cent returns, started the year off positively, though muted compared to last year, at +0.99 per cent.
Primary strategies with the weakest performance in January were Macro funds, which returned -0.33 per cent, and Managed Futures funds, which returned -0.74 per cent.
In addition to highlighting performance by major segment, the report looks at performance by size of the fund, categorising the overall industry into Large (greater than USD1 billion in AUM), Mid-Sized (less than USD1 billion AUM and greater than USD250 million AUM) and Small (under USD250 million) funds and splitting major strategies into greater than or less than USD1 billion in AUM. The size chart also pulls out and highlights performance among the 10 largest funds in each segment reviewed, a new element to this report.