09/03/21

FINTECH: Hedge funds make gains from “record” cryptocurrency highs.

As published on funds-europe.com, Monday 8 March, 2021.

Hedge funds exposed to blockchain and cryptocurrencies such as bitcoin continued to deliver strong performance in February as cryptocurrencies reached “record” highs and hedge funds increasingly added crypto exposures.

Data from Hedge Fund Research shows that both the HFR blockchain and cryptocurrency indices surged by nearly 30% in February.

Hedge funds continued the trend seen in January with strong overall performance, but also with a wide dispersion between the top and bottom deciles.

The ongoing positive performance was mainly put down to interest rates, commodity prices, and expectations for a return of inflation. However, while the top decile of the HFR Index gained 16.3%, the bottom decile declined -3.1% for the month.

HFR’s Equity hedge fund strategy index surged by nearly 5%, while the event-driven index added nearly 3%. Overall, the HFRI Fund Weighted Composite Index gained 4.1% during February. 

Other notable sectors include the energy/basic materials index which added 9.7%, and the technology index which added 4.4%.

Kenneth J Heinz, president of HFR, said: “New stimulus measures, increasing vaccinations, and uncertainty with regards to immigration and energy policy have shifted macroeconomic and geopolitical volatility to include not only the single stock or asset trends from concentrated, increased retail trading but also cryptocurrency trading, energy exposure and interest rate/inflation sensitivity.”