Hedge Fund Managers Were Up 2.16% In April

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Jacob Wolinsky
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The May 2021 Eurekahedge report has been released

Q1 2021 hedge fund letters, conferences and more

Key highlights for April 2021:

  • Hedge fund managers were up 2.16% in April – supported by the strong performance of the global equity market as represented by the MSCI ACWI (Local) which gained 3.53% during the month. In terms of year-to-date return, global hedge funds registered their best April year-to-date return since 2006 with a return of 6.99%. Around 80.3% of the global hedge funds tracked by the Eurekahedge database posted positive returns in April, and 24.0% of the hedge fund managers in the database were able to maintain a double digit return in 2021.
  • On an asset-weighted basis, hedge funds were up 2.48% in April, as captured by the Eurekahedge Asset Weighted Index – USD. In terms of year-to-date performance, the index is only up 3.50%, highlighting the struggles for some of the larger asset managers over the year.
  • North American hedge funds gained 2.96% in April, outperforming their Asia ex-Japan and European peers who returned 2.49% and 1.47% respectively. In terms of year-to-date return, North American hedge funds have also performed the best as they have returned 9.61% over the first four months of 2021. In comparison, European and Asia ex-Japan hedge funds have returned 5.33% and 5.12% respectively over the same period.
  • The Eurekahedge Event Driven Hedge Fund Index was up 2.83% in April, recording its thirteenth consecutive month of positive return since April 2020. The recent pick-up in activity of the merger and acquisitions space contributed to the strong performance of the hedge fund managers as seen in the 2.07% gain in the S&P Merger Arbitrage Index in April 2021. In terms of year-to-date return, event driven hedge funds are up 9.77%, recording the highest return among their main strategic peers.
  • The Eurekahedge Long Short Equities Hedge Fund Index gained 2.80% in April, extending its streak of consecutive positive returns to 7 months. Long short equities hedge funds were supported by the strong performance of the equity market as the S&P500 gained 5.24% in April. In terms of year-to-date return, long/short equities hedge funds have returned 8.82%, recording their best April year-to-date return since 2006.
  • • The Eurekahedge Commodity Hedge Fund Index was up 4.90% in April, recording the highest return among secondary strategies over the month. Hedge fund managers utilising the commodity strategy were supported by the strong return of the S&P Goldman Sachs Commodity Index which gained 8.23% in April. In terms of year-to-date return, commodity hedge funds are up 7.00%, recording their best April year-to-date return since 2006.
  • • Fund managers focusing on cryptocurrencies were up 13.63% in April as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index, outperforming Bitcoin which lost 9.32% over the same period. Cryptocurrency hedge funds were supported by the strong performance of other cryptocurrencies such as Ripple, Ethereum and Litecoin which posted gains of 146.61%, 49.87% and 30.35% respectively in April. In terms of year-to-date return, cryptocurrency hedge funds have gained 142.62%, outperforming Bitcoin which posted a return of 85.13% over the first four months of 2021.

Key Trends in European Hedge Funds

European Hedge Funds

European Hedge Funds

European Hedge Funds

European Hedge Funds

European Hedge Funds

The Eurekahedge Hedge Fund Index was up 2.16%1 in April, supported by the robust performance of the global equity market as represented by the MSCI ACWI (Local) which gained 3.53% over the same month. Strong corporate earnings and better than expected macroeconomic data acted as a tailwind to the performance of the equity market over the month. As fears of the COVID-19 pandemic’s impact on the recovery of the US economy lingered, the Federal Reserve reassured the market that monetary policy will be kept accommodative until the economy has made sufficient progress towards a recovery. The yield of the 10-year Treasury Note declined by 12 bp, causing a rally in interest rate sensitive tech stocks during the month. The NASDAQ Composite was up 5.40% in April, significantly outperforming the DJIA which was up 2.71% over the same period. Over in Europe, the European Central Bank made similar reassurances to provide lasting support to the economy which boosted investors’ confidence. The CAC 40 and DAX gained 3.33% and 0.85% in April respectively, bringing their 2021 return into double-digit territory. Returns were mostly positive across geographic mandates in April with North American and Asia ex-Japan hedge funds gaining 2.96% and 2.49% respectively while Japanese hedge funds were down 1.21%. Across strategies, event driven and long/short equities outperformed their strategic peers with returns of 2.83% and 2.80% respectively throughout the month.

Roughly 80.3% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in April, and 24.0% of the hedge fund managers in the database were able to maintain a double digit return in 2021.

April 2021 and March 2021 returns across regions

European Hedge Funds

As of April year-to-date, all of the geographic mandates have recorded positive returns. Global hedge funds registered their best April year-to-date return since 2006 as they returned 6.99%, supported by the US$1.9 trillion economic stimulus package rolled out by the Biden administration as well as the continued speedy rollout of COVID-19 vaccinations. North American hedge funds outperformed their regional peers with their 9.61% return, followed by European hedge funds which returned 5.33%. At the other end of the spectrum, Latin American hedge funds lagged behind the group with a return of 0.95% as their returns were negatively impacted by the poor performance of the Latin American equity market, with the MSCI EM Latin America Index IMI (Local) returning 0.60% over the first four months of 2021.

Summary monthly asset flow data since January 2013

European Hedge Funds

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Jacob Wolinsky is the founder of HedgeFundAlpha (formerly ValueWalk Premium), a popular value investing and hedge fund focused intelligence service. Prior to founding the company, Jacob worked as an equity analyst focused on small caps. Jacob lives with his wife and five kids in Passaic NJ. - Email: jacob(at)hedgefundalpha.com FD: I do not purchase any equities to avoid conflict of interest and any insider information. I only purchase broad-based ETFs and mutual funds.