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Hedge Funds Lost 0.4% in June, Hurt by Macro, Event Managers

Updated on
  • Macro strategies declined 1.6% last month, HFR says in report
  • Equity hedge funds were biggest gainers, at 1.2% for June

Hedge funds posted their first losing month of the year in June, hurt by the poor performance of event-driven and macro strategies.

The funds on average dropped 0.4 percent last month, according to Hedge Fund Research Inc.’s asset weighted composite index. They gained 2.4 percent in the first six months of the year, the strongest half-year performance since 2014.

The industry had been gaining steam this year after a lackluster 2016 until it hit a wall in June. Macro funds had the poorest performance of any strategy, posting a 1.6 percent loss. Event-driven strategies, which had been doing well, dropped 0.3 percent. Equity managers kept their momentum in June, returning 1.2 percent, the most of any strategy.

"As far as returns year-to-date go, I don’t think there’s going to be a lot of concern,” said Don Steinbrugge, founder of hedge fund consulting and marketing firm Agecroft Partners. “Hedge funds are on target right now to perform in line with what expectations are,” he said, citing a range of 4 to 7 percent.

Macro managers have said low interest rates globally as well as the rise of quantitative investing have hurt them. Andrew Law at Caxton Associates has posted record losses. Alan Howard, who runs Brevan Howard Asset Management, had the worst first-half in his hedge fund’s history. Macro funds on average lost 0.3 percent in the first six months, according to HFR’s report Monday.

MACRO FUNDSIX-MONTH RETURN (%)
Rubicon Global Fund-27
Discovery Global Opportunity Fund-11
Caxton Global Investments-10.4
Dymon Asia Macro Fund-8.2

Equity hedge funds, on the other had, are leading the industry in the first half, returning 5.9 percent. They have been buoyed by a rising market, with the S&P 500 Index increasing 9.3 percent in the period with reinvested dividends.

EQUITY FUNDSIX-MONTH RETURN (%)
QIM’s Quantitative Tactical Aggressive Fund48.2
Cadian Fund25.5
Coatue Qualified Partners16.5
White Elm Capital Partners16.2
Zimmer Partners’s Utility Fund12
Renaissance Institutional Equities Fund7.8
Viking Global Equities7
Zimmer Partners’s Energy Fund3

Source: Investor documents, Bloomberg News

Spokesmen for the firms either declined to comment or didn’t
respond to requests for comment.

— With assistance by Hema Parmar

(Updates with performance numbers in the third paragraph.)
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