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Even If Just the Eye of the Storm, October Gains a Welcome Respite for Battered Traders

Hedge Fund Industry Up +2.32% in the Calm; Trims YTD Losses to -9.28%


As equity markets enjoyed substantial gains in October, the global hedge fund industry staged its own recovery posting a +2.32% monthly return, 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 +8.10% in October.

The hedge fund industry also trimmed its year-to-date losses in October, finishing down -9.28% year-to-date through the end of the month. Hedge funds’ performance over the period bettered that of the S&P 500 Total Return Index which was off -17.70% year to date.

“October offered equity traders a moment’s respite from the otherwise relentless flogging it has had on offer throughout 2022,” said Ben Crawford, Head of Research at BarclayHedge. “Wasting no time, risk appetites rebounded and the valuations of equities and other risky assets broadly recovered some of their lost ground. Among the highlights was the Dow seeing its best month since 1976. Technology stocks, one of the most bruised sectors worldwide, savored the cooling balm of a monthly gain in October, though both the Nasdaq Composite and the Barclay Hedge Technology Index remain deep in the red on the year.”

Hedge fund subsectors posting monthly gains in October outnumbered the month’s losers by a roughly three-to-one margin. The best performing sectors were led by the Option Strategies Index which returned +4.91%. It was followed closely by an unusually tight knot of challengers which included the Emerging Markets Eastern Europe Index (+4.83%); the Healthcare & Biotechnology Index (+4.78%); the Emerging Markets Latin American Equities Index (+4.45%); the Equity Long Bias Index (+4.31%); and the Event Driven Index (+4.28%).

Of the subsectors enduring losses in October, Asian-focused managers took the worst hit. The Emerging Markets Asian Equities Index shed --4.65% and the Emerging Markets Asia Index was off --3.84%. They were joined by a crestfallen procession that included the Emerging Markets Mena Index (--2.19%); the Emerging Markets Global Equities Index (--2.03%); the Emerging Markets Index (--1.93%); and the Emerging Markets Global Index (--1.50%).

“Hedge funds benefitted from the equity markets surge across many markets in October, but the swell didn’t reach all shores,” remarked Crawford. “Many emerging market managers continued to founder in October, particularly in Asia, Africa and the Middle East.”

Five out of six hedge fund subsectors remain underwater for 2022. The minority of profitable sectors are championed by the Global Macro Index which is up +7.71% through October and outperforming the broad Barclay Hedge Fund Index by almost +17%. Nipping at its heels, however, is the Emerging Markets Latin American Equities Index (+6.94%); the Emerging Markets Latin America Index (+4.66%); and the Equity Market Neutral Index (+2.09%). The Merger Arbitrage Index brought up the rear of the group with a return of +15 basis points.

While the majority of segments are struggling with losses on the year, the bottom-performing half are overwhelmingly dominated by emerging market managers and technology-focused strategies. At the bottom of the heap is the Emerging Markets Eastern European Equities Index down --32.26%. In its lachrymose company are the Emerging Markets Asian Equities Index (--24.29%); the Emerging Markets Eastern Europe Index (--24.07%); the Emerging Markets Global Equities Index (--23.31%); the Technology Index (--22.88%); the Emerging Markets Asia Index (--21.99%); the Emerging Markets Global Index (--20.58%); the Emerging Markets Index (--18.93%); and the Healthcare & Biotechnology Index (--16.92%).

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


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Malea Lydon

BackBay Communications