Saturday, February 24, 2024

Equity hedge funds lead strong gains in November

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Hedge funds had one of their best recent months in November against the backdrop of an equity market surge.

Long/short equity funds led the gains, according to Hedge Fund Research, with quantitative directional, technology, fundamental value and healthcare the top sub-sectors.

HFR’s equity index made 4.1%, putting it up 6.3% for the year, while event-driven and relative value funds also advanced, on average. The core HFRI Fund Weighted Composite Index made 2.2%, doubling returns for the year to 4.4%.

The S&P 500 rose almost 9% in November, its best month since July 2022, as bond yields fell on falling inflation data.

There was a notable increase in hedge fund performance dispersion. “Hedge funds surged in November, led by directional equity hedge and event-driven strategies,” said HFR chair Ken Heinz.

“Powerful risk-on sentiment dominated financial markets driven by an unexpected decline in inflation, falling bond yields, an uptick in M&A, and broad-based equity market gains.”

The gains are a welcome boon for long/short equity, which has seen more outflows this year. A net $5bn was pulled from the strategy in October, according to eVestment, taking net outflows in the first ten months to $28bn.