New York — Hedge fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its mid-month highs and hedge funds into the red for the year.
Hedge funds fell 0.56 per cent in the first quarter, compared with a 1.42% gain for the three months ended February 28, according to data compiled in the Bloomberg Hedge Fund Database. Funds also finished the month of March down 0.75 per cent, paring losses from February when they fell 2.19 per cent.
Both types of fixed income strategies fell 0.10 per cent in March, but ended the quarter in the black. Fixed income directional ended the first quarter up 0.75 per cent, while fixed income relative value rose 1.03 per cent.
Funds styles in the red topped those in the black by 19 to 7 in March, with bhort biased-style funds leading the table at 2.64 per cent on the upside. Currency strategies, a subset of CTA/managed futures, finished March at the bottom, plunging 6.33 per cent. That helped push currency strategies down 14.7 per cent, the biggest drop in the quarter.
Activist-style funds posted the biggest gains in the quarter at 3.67 per cent, despite falling 1.66 per cent in March. Long-short funds outpaced the S&P 500 by 174 basis points, finishing the month down 0.80 per cent. For the first quarter, Long-short funds were up 0.30 per cent, easily outpacing the S&P 500, which fell 1.58 per cent on a total-return basis.
Overall, commodity trading advisers/managed futures strategies had the largest monthly swing in either direction from results in February at nearly 550 basis points, ending March down 0.27 per cent, compared with down 5.75 per cent in February.
Healthcare-focused funds rose 0.04 per cent for the month, ending the quarter up 4.66 per cent, the highest among industry-focused funds. Technology-focused funds were down the most in March, falling 1.05 per cent, though it wasn’t enough to push them into the red after gains the prior two months. They finished the quarter up 2.82 per cent. Real estate funds ended the quarter the lowest ranked among industry-focused funds, down 1.93 per cent, despite finishing March up 0.30 per cent.