FAIRFIELD, IOWA SEPTEMBER 13, 2022
The hedge fund industry’s performance turned downward again in August, losing -0.60% for the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions.
The hedge fund industry outperformed the S&P 500 Total Return Index, however, which was down -4.08% in August.
For the year to date, the hedge fund industry was down -7.86% through August. Again, hedge funds fared better than the S&P 500 Total Return Index, which was off -16.17% over the period.
“In August, equity markets gave up much (but not all) of the ground they reclaimed in July and Hedge Funds broadly followed them back into the red, although not nearly so deep,” reflected Ben Crawford, Head of Research at BarclayHedge. “The critical theme for Hedge Funds in August and in 2022 generally has been about downside protection. While the average hedge fund in our universe is down almost eight percentage points, the S&P 500 has performed more than twice as poorly. Moreover, the S&P 500 has been more than three-times more volatile over the same period.”
Despite the industry-wide monthly loss, hedge fund subsectors posting gains for the month outnumbered losers by a two-to-one margin. The month’s gainers were led by the Emerging Markets Eastern Europe Index, which enjoyed a significant bounce of +7.55%. That segment was followed by the Emerging Markets Latin American Equities Index which was up +3.34%; the European Equities Index +2.32%; the Pacific Rim Equities Index +1.68%; the Emerging Markets Eastern European Equities Index +1.42%; and the Convertible Arbitrage Index +1.26%.
At the vanguard of those Hedge Fund subsectors which lost ground in August was the Healthcare & Biotechnology Index which dropped -2.30%. Also notable in this procession was the Balanced (Stocks & Bonds) Index which sagged -2.09%; the Equity Long Bias Index -1.51%; the Technology Index -1.33%; the Fund of Funds Index -0.81%; and the Volatility Trading Index -0.47%.
For the year-to-date, all but a handful of hedge fund subsectors remained in the red through August. Among these few industry subsectors that have managed to make money, the Global Macro Index stands head and shoulders above its peers with a +6.17% on the year. All other profitable strategies have shown a total return less than 3% on the year, and this is indicative of what a challenging environment 2022 has proven to be. The Emerging Markets Latin American Equities Index is up +2.71% on the year while the Emerging Markets Latin America Index has gained +1.81%; the European Equities Index +1.60%; the Equity Market Neutral Index +1.55%; and that’s all, folks.
On the flip side, the aggregate year-to-date losses are not for the faint of heart. Subsectors reporting year-to-date losses continue to be led by managers focused in Eastern Europe. Despite a nice result in August, the Emerging Markets Eastern European Equities Index remains down -31.96% for 2022. The Emerging Markets Eastern Europe Index is also deep underwater at -22.76% through August. Elsewhere, Technology and Biotech managers continued to struggle. The Healthcare & Biotechnology Index is behind -19.45% and the BarclayHedge Technology Index isn’t faring much better at -18.75% on the year. Battered Emerging Market Equities managers are also staggering near the rear of the industry. The Emerging Markets Asian Equities Index is down a combined -14.22% and the Emerging Markets Global Equities Index is off -14.07%.
“While angst over inflation eased slightly in August, recession worries continued to haunt markets,” observed Crawford. “Meanwhile, key central bankers signaled their resolution that additional monetary tightening would be necessary to tamp down inflation in the intermediate term, with acknowledgement from U.S. Fed Chairman Jerome Powell that rate hikes would continue – and would likely cause some pain for businesses and households.”
For a complete table of BarclayHedge Hedge Fund and Sub-Index results for August, as well as historical returns, click here.
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BarclayHedge, a division of Backstop, currently maintains data on more than 6,900 hedge funds, funds of funds and CTAs. The BarclayHedge Indices are utilized by institutional investors, brokerage firms and private banks worldwide as performance benchmarks for the hedge fund and managed futures industries.