Hurt Hedge Funds Recovering on Best Month in Two Years

  • Almost 70% of hedge funds globally advanced in March
  • Average return of funds was 2.3%, according to eVestment

After the worst start to a year since 2008, hedge funds repaired some of the damage in March as investments in equities, fixed income and commodities fueled the best monthly gains in two years.

Almost 70 percent of hedge funds globally advanced last month, with average returns of 2.3 percent, according to eVestment on Friday. The $1.3 billion CQS Diversified Fund, down more than 4 percent through February, gained 5.2 percent, according to an investor letter seen by Bloomberg, while the Lyxor Odyssey Value Fund which manages less than $10 million was up 9 percent after losing 13 percent in the first two months. A spokesman for CQS declined to comment.

The near $3 trillion hedge-fund industry has faced criticism for poor performance this year with some of the best known firms still to recover losses. The $831 million Odey European Inc. fund lost 22.4 percent in March, worsening its decline for the year to 25.8 percent, according to a spokeswoman.

“The solid performance of hedge funds in March was related to the gains generated by long-short equity and event driven strategies as markets rallied," said Philippe Ferreira, a strategist at Lyxor Asset Management. "To a lower extent, long-short credit also fueled overall hedge-fund performance."

Hedge funds globally lost 1.7 percent in January, according to Hedge Fund Research Inc., who described it as the worst start for eight years.

Lansdowne Partners’s $11.4 billion Developed Markets Fund, which bets on rising and falling share values, lost 8 percent this year through end of March, a person familiar with the matter said. Andrew Honnor, a spokesman for Lansdowne at Greenbrook Communications, declined to comment.

Zimmer Partners, the $2.5 billion energy-focused firm, saw its long-biased equity fund make a comeback, gaining 10.6 percent in March after falling 4.6 percent in January, according to an investor letter obtained by Bloomberg. The ZP Energy Fund, which manages $650 million and bets on energy company equities and master limited partnerships, gained 2.5 in February. Last month, the fund doubled its assets under management.

The Alerian MLP Infrastructure Index gained 8.5 percent last month while oil prices rebounded, up almost 14 percent in March.

Melanie Ashmore, a spokeswoman for Zimmer, declined to comment.

The MSCI World Index increased 6.5 percent in March following losses of almost 7 percent during the first two months of the year. Investment-grade company bonds returned 2.26 percent globally in March, the most since January 2015, according to Bank of America Merrill Lynch index data. Junk bonds returned 4.31 percent, the most since October 2011, the data show.

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