PivotalPath has released their monthly report, the Pivotal Point Of View, which measures performance among more than 2,500 institutionally-relevant hedge funds and spanning $3T of industry assets.
Key Takeaways:
- Hedge funds enjoyed a positive November, following October’s flat month, with the PivotalPath Hedge Fund Composite Index up 2.1%.
- Drill down and November’s returns were largely driven by US beta gains courtesy of the early month ‘Trump bump’.
- The Technology/Media/Telecom Index is the strongest of all PivotalPath’s indices, up 24.4% for the year and 29.0% over the last 12 months.
- Managers expect the clear election result to accelerate US equity growth into the end of the year, while the dispersion the Trump win seeds in global markets will also spell opportunity.
- For the 12-month rolling period through November, Credit and Multi-Strat funds continue to produce the highest alpha relative to the S&P 500, a dominant streak that began in Q3.
- Approximately 80% of all funds reporting were positive in November. The average return of those positive was 3.56%, while the average return of declining funds was -2.17%.
2024 Hedge Fund Performance
Strategy Highlights: PivotalPath main indices experience a strong November
- After a challenging October PivotalPath’s main Indices experienced a strong November, as the majority benefited from a surging US market and the dispersion of a pre- and post-US election world.
- While the equity space was the headline benefactor, volatility funds also performed well, with the PivotalPath Volatility Trading Index up 0% for the month. While traditional measures of volatility fell in November, managers are currently talking up the prospect of volatility of volatility coming into play.
- The PivotalPath Global Macro Index also enjoyed a decent month, up 5% across the month vs. 5.1% YTD. Trump is seen as a positive force for macro players, giving them a chance to get on the right side of a renewed era of currency volatility.
Pivotal Context
The Backdrop: Managers were surprised by the Republican sweep, but are positive about its impact on the economy
- With the small matter of the US election now done and dusted, managers are absorbing both the domestic and global implications of an impressive Republican sweep.
- Early takes are that the clear result will accelerate US equity growth into the end of the year, while the dispersion the Trump win seeds in global markets will also spell opportunity.
- The Fed’s 25bps rates cut early in November – largely overshadowed by the stock market surge at the start of the month – was also deemed a positive move, although another cut before the end of the year is in the balance, and many managers are still pricing in too many cuts, while ignoring early signs of renewed inflation that could spoil recent gains.
- In terms of these gains, if there has been any recent concern around funds’ multi-faceted, but largely positive, AI theses, Nvidia’s Q3 earnings was a vote of confidence in ongoing AI investment – particularly around the technology, data centers and energy required to build a global AI infrastructure.
- The hedge fund consensus remains that AI will reshape economies – although the speed, evolutionary direction and “profitability-inflection-point” of this emerging tech remain questions that managers are trying to answer.
Read the full report here by PivotalPath
