Hedge fund industry gains 5.46 per cent in April, says Backstop BarclayHedge

Hedge funds posted a 5.46 per cent return in April 2020, according to the Barclay Hedge Fund Index compiled by BarclayHedge, as US stocks recorded their best month in decades. The S&P 500 Total Return Index rose 12.8 per cent over the same month, so hedge funds trailed the broad equity benchmark. Despite that gap, the industry remained down 7.01 per cent year-to-date through April, against a 9.29 per cent year-to-date decline in the S&P 500 Total Return Index.

Nearly all Barclay Hedge Fund sector indices finished April in positive territory. The exceptions were the Volatility Trading Index, which fell 0.17 per cent, and the Emerging Markets MENA Index, which lost 2.00 per cent. The gains came despite a backdrop of rapidly rising unemployment, plummeting oil prices and contracting economies. Sol Waksman, president of BarclayHedge, attributed the performance to the worsening coronavirus situation being outweighed by massive government stimulus programs, which he said buoyed equity markets and provided a favourable tailwind for hedge funds.

Healthcare & Biotechnology was the strongest performer in April at 13.27 per cent, reflecting investor focus on the global healthcare crisis. Several emerging markets sectors also rebounded after being battered in March, with the Emerging Markets Global Equities Index returning 8.84 per cent and the Emerging Markets Asian Equities Index gaining 8.77 per cent. Other leading April gainers included the Event Driven Index (8.02 per cent), the Equity Long Bias Index (7.73 per cent) and the Merger Arbitrage Index (5.41 per cent).

On a year-to-date basis, only four sectors were positive through April. The Volatility Trading Index led at 7.28 per cent, followed by the Fixed Income Arbitrage Index (2.14 per cent), the Option Strategies Index (1.35 per cent) and the Healthcare & Biotechnology Index (0.22 per cent). Losses were concentrated in emerging markets and Asia-Pacific equity strategies: the Emerging Markets Latin American Equities Index fell 23.96 per cent, the Pacific Rim Equities Index dropped 16.71 per cent, the Emerging Markets Global Equities Index declined 16.38 per cent, and the Emerging Markets Eastern European Equities Index lost 14.99 per cent.