FAIRFIELD, Iowa, January 16, 2019 – Hedge funds dipped 2.61% in December, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions. The loss was less significant, however, than that of the S&P 500 Total Return Index, which dropped 9.03% in December.
For the year, the Barclay Hedge Fund Index was down 5.08% in 2018, while the S&P 500 Total Return Index was down 4.38% for the year.
While lowering its projections for future interest rate hikes, the U.S. Federal Reserve raised its benchmark rate a quarter-point in December. That, coupled with extreme volatility in equity markets was a major factor in December’s hedge fund downturn. Other issues affecting investor sentiment were the state of the Chinese economy, which saw a 4.4% drop in exports in December, the largest such decline in two years. Meanwhile, consumer confidence fell significantly in the Eurozone in December, driven in part by a decline in industrial output in Germany.
Most of Barclay’s hedge fund indices showed declines in December. Notably, Healthcare & Biotechnology dropped 7.32% while the Equity Long Bias Index was down 5.22%. The Technology Index was down 4.54% for December; the Emerging Markets Eastern European Equities Index was down 4.11% for the month, the Emerging Markets Eastern Europe Index, down 3.84%; and the Distressed Securities Index was down 3.44%.
A handful of indices – most of them emerging markets indices – posted gains in December, including the Emerging Markets Latin American Equities Index, up 0.47%; the Equity Market Neutral Index, up 0.39%; the Emerging Markets Other Index, up 0.34%; and the Emerging Markets Latin America Index, up 0.29%.
Across the board, 2018 proved a tough year for hedge funds, with the lion’s share of indices showing downturns for the year. In particular, a number of emerging markets indices were down significantly, including several posting double-digit downturns; Emerging Markets Global Fixed Income Index, down 24.78%; the Emerging Markets Global Equities Index, down 13.66%; the Emerging Markets Asian Equities Index, down 13.40%; the Emerging Markets Global Index, down 11.46%; the Emerging Markets Index, down 10.98%; and the Emerging Markets Eastern Europe Index, down 10.58%.
Indices that posted gains for 2018 included the Technology Index, up 1.52% for the year; the Healthcare & Biotechnology Index, up 1.37%; the Convertible Arbitrage Index, up 0.58%; the Merger Arbitrage Index, up 0.46%; and the Fixed Income Arbitrage Index, up 0.34%.
For a complete table of BarclayHedge Fund and Sub-Index results for December as well as historical returns, click here.
About Backstop Solutions
Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share, and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to investment consultants, pensions, funds of funds, family offices, endowments, foundations, private equity, hedge funds, and real estate investment firms.
BarclayHedge, a division of Backstop, currently maintains data on more than 6,900 hedge funds, funds of funds, and CTAs. Institutional investors, brokerage firms, and private banks worldwide utilize BarclayHedge indices as performance benchmarks for the hedge fund and managed futures industries.
BarclayHedge, a division of Backstop Solutions Group