Hedge Fund Industry Halts Three Months of Down Results with Positive 0.25% Return in February

The hedge fund industry produced an aggregate return of 0.25% in February 2016, halting the industry’s three consecutive months of performance declines, according to the just-released eVestment February 2016 Hedge Fund Performance Report.

A little more than half the industry produced positive results in February, a large improvement over January when only 28% of funds we able to produce positive returns. Interestingly, the average positive return in February was very similar to January (+2.68% in February compared to +2.57% in January), but average losses were much less severe (-2.33% in February vs. -4.63% in January).

A few other interesting points from the report, according to report author and eVestment Vice President and Global Head of Research Peter Laurelli (pictured), include:

· Managed futures products are off to a fast start in 2016, with 2.44% returns in February and 4.15% year-to-date, and lead all other strategies’ performance by more than two times. However, universe started 2015 similarly, but ultimately ended with elevated volatility and aggregate performance declines.

· Macro hedge funds followed a positive start to 2016 with a firmly positive month in February with returns of 1.33%.

· Commodity funds, which have seen investor sentiment shift in their favor in recent months, were positive in February at 0.79%, with year-to-date returns positive as well.

· Losses in the credit space continue to be a drag on overall industry returns. February’s decline of -0.73% is the universe’s fourth consecutive monthly decline and seventh in the last eight months.

· Emerging markets rebounded in February after suffering their largest losses to begin a year since 2008. The commodity price reversal in February likely attributed to the gains as Brazil and Russia both rebounded. Brazilian equities in particular were the primary source of February’s gains.

· Losses from China continued into February, albeit at a far muted level than the -10.63% decline in January. Performance was not universally negative during February, a good indication homogeneity is not rampant within the universe. China-focused funds are -11.65% to begin 2016 after returning an average of nearly 8% last year.

To download a full copy of the report, please click here.