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Hedge Fund Industry Seen Building Momentum in 2023 through Modest Wins

The Desert Brings the Heat: Funds in the MENA Region Thriving Amidst Hot Markets

FAIRFIELD, IOWA May 16, 2023

The hedge fund industry built on its prior month’s gains in April, returning 0.41% for the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions.

By comparison, the S&P 500 Total Return Index gained 1.56% in April.

For the year to date, the hedge fund industry has returned 2.73% through the end of April. The S&P 500 Total Return Index was up 9.17% over the same period.

Hedge fund subsectors gaining ground in April outnumbered losers by nearly three-to-one. The Emerging Markets MENA Index was the month’s pacesetter, advancing 7.62%. It was joined on the rostrum by the Healthcare & Biotechnology Index and the Emerging Markets Latin American Equities Index which gained 3.87% and 1.88% on the month, respectively. Other profitable hedge fund subsectors included the Fixed Income Arbitrage Index (+1.20%); the Emerging Markets Eastern Europe Index (+0.96%); the Emerging Markets Sub Saharan Africa Index (+0.93%); the Emerging Markets Latin America Index (+0.92%); the Pacific Rim Equities Index (+0.87%); and the Emerging Markets Global Fixed Income Index (+0.79%).

Subsectors posting monthly losses in April were led by the Technology Index which was down -2.09%. Losses elsewhere were more modest and included the Emerging Markets Asian Equities Index off -0.67%; the Emerging Markets Asia Index slipped -0.54%; the European Equities Index lost -0.40%; the Emerging Markets Global Equities Index receded -0.22%; the Emerging Markets Global Index fell by -18 basis points; and the Distressed Securities Index was off by -3 basis points.

When viewed from the year-to-date perspective, all but one hedge fund subsector was in positive territory for the year through April. Well at the front of the pack is the Emerging Markets Mena Index which is up a compound 18.70%. Its closest pursuers are the Technology Index and the Healthcare & Biotechnology Index which are up 7.25% and 5.17%, respectively. Further back but still in the black we find the Pacific Rim Equities Index (+4.35%); the Equity Long Bias Index (+4.21%); the Emerging Markets Global Fixed Income Index (+4.04%); the Balanced (Stocks & Bonds) Index (+3.59%); the Emerging Markets Global Equities Index (+3.22%); and the Option Strategies Index (+3.18%).

The lone subsector posting a year-to-date loss was the Distressed Securities Index, which finds itself -1.58% in the hole so far in 2023.

“Most hedge funds have been able to capture more of the upside than they have the downside that has resulted from the on-again, off-again surges in equity and debt markets we’ve seen so far this year. As a result, all but one of the hedge fund indices we track are up through the first third of 2023,” said Ben Crawford, Head of Research at BarclayHedge. “Meanwhile, continued evidence of cooling inflation boosted opportunities in certain markets—for example, funds focused on the healthcare and biotechnology industry have benefited from renewed deal making activity in the sector. Nevertheless, tightening liquidity, a rising cost of capital and fears of a “not-so-soft” landing for major economies loom large and threaten to overtake the momentum hedge funds have built up thus far in 2023.”

For a complete table of BarclayHedge Hedge Fund and Sub-Index results for April, as well as historical returns, click here.


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Malea Lydon

BackBay Communications