Alt Investments
Hedge Funds Shoot Lights Out In November
A range of different strategies, such as those linked to the equity market, M&A, and cryptocurrencies, fared strongly in November and chalked up some of the strongest monthly gains ever for the industry.
A broad measure of hedge fund returns surged to its second-strongest ever monthly gain in November after US elections results seemed to remove the risk of onerous regulations and taxes, and because of optimism for COVID-19 vaccines.
The investible HFRI 500 Fund Weighted Composite Index rose by 4.6 per cent for the month, increasing the year-to-date 2020 return to 5.6 per cent, Hedge Fund Research, a Chicago-based group, said yesterday. Meanwhile, the HFRI Fund Weighted Composite Index®, another measure of performance, rose by 6.2 per cent in November, the strongest monthly gain since December 1999 and the second-strongest month since the index inception in 1990.
Equity H#hedge strategies unsurprisingly drove results, as stock markets gained. The HFRI Equity Hedge (Total) Index rose by 8.7 per cent for the month, the highest monthly gain since February 2000, while the investable HFRI 500 Equity Hedge Index surged by 7.5 per cent, the strongest month ever.
Event-driven strategies – which typically try to profit from events such as corporate mergers - also surged in November, with broad-based strategy gains from several sectors.
The HFR figures also showed that hedge funds tapping into cryptocurrencies such as bitcoin made strong ground. Another strong gainer was distributed ledger technology, or blockchain. The HFR Blockchain Index surged by 53.4 per cent in November, lifting year-to-date performance to 159.2 per cent, while the HFR Cryptocurrency Index soared by 57.2 per cent for the month.
“Through the powerful and volatile macroeconomic and geopolitical trends which have defined 2020, institutions have continued to increase allocations to hedge funds and other alternatives, building in strong performance momentum and positioning for acceleration of these gains into 2020,” Kenneth J Heinz, president of HFR, said.
