PivotalPath has released their monthly report, the Pivotal Point Of View, which measures performance among more than 2,500 institutionally-relevant hedge funds, as well as 40+ different hedge fund strategies and $2.5T in total industry assets.
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At a high level, the biggest takeaways seem to be:
- The PivotalPath Composite Index declined 0.9% in October, leaving the Index +3.6% YTD. The Index continues to generate positive alpha of 3.2% relative to the S&P 500 (S&P) over the last 12 months.
- The major Hedge Fund strategy Indices, while outperforming equity indices, were mostly negative for the month.
- YTD, all major Hedge Fund Indices remain positive with Equity Quant and Credit Indices leading the way, +5.9% and +5.8% respectively.
Q3 2023 hedge fund letters, conferences and more
2023 Hedge Fund Performance
Strategy Highlights
- The major Hedge Fund strategy Indices, while outperforming equity indices, were mostly negative for the month.
- The Equity Quant and Volatility Trading Indices generated positive returns of 1.1% and 0.8% respectively, while Managed Futures, Equity Sector and Event Driven Indices declined the most.
- YTD, all major Hedge Fund Indices remain positive with Equity Quant and Credit Indices leading the way, +5.9% and +5.8% respectively.
What we’re seeing:
The PivotalPath Equity Quant Index continues to generate consistent returns since 2021 after 4 years of lackluster performance, leading all major hedge fund indices over the past 12 months with a return of 9.3%. Over the last 3 years through October, the Index is second to only Managed Futures annualizing returns of 9.2%.
Pivotal Context
The Backdrop: Interest Rates and Global Demand
- Continued and increased concerns of a global slowdown, higher interest rates for longer and the potential for a hard landing produced a risk off posture. And wars in Israel and Ukraine added fuel to the fire. The market reaction to the heightened uncertainty drove the S&P down 2.1%, the Nasdaq 2.8%, the DJIA 1.4%, and the Russell 2000 6.9%. This was the 3rd consecutive month of significant declines coming after most equity markets peaked in July. The Russell 2000 and DJIA are now negative for the year at -5.6% and -0.3% respectively.
- The higher for longer and hard economic landing scenarios fueled the US 10-year Treasury yield to increase again from 4.57% to 4.93% in October, though the US 2-Year yield only increased from 5.04% to 5.09%.
- The economic concerns and higher rates caused continued broad sector declines. Biotech (XBI) declined 9.3% in October after declining 7.8% in September. Consumer Discretionary (XLY) gave back 5.52% and Energy (XLE) declined 5.75%.
- Volatility continued to climb with the VIX finishing at 18.14 vs the relatively low levels of 13.57% in August and 13.63% in July.
Read the full report here.
