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Hedge funds recorded their best Q1 performance since 2006

by LLB Editor
14th Apr 21 10:55 am

The Eurekahedge Hedge Fund Index was up 0.95% in March 2021, supported by the robust performance of the global equity market as represented by the MSCI ACWI (Local) which gained 3.24% over the same period.

Long-dated US treasuries continued to sell off, resulting in the yield of the 10-year treasury note rising by 34bp to end the month at 1.744%.

The Federal Reserve committed to keep monetary policy accommodative for at least another two years and allow inflation to rise above 2% before considering any policy change. This led to growing concerns among investors that the huge economic and monetary stimulus rolled out thus far would lead to rising inflation.

The equity market in the United States continued to record strong returns in March 2021, with the DJIA gaining 6.62% and the S&P 500 gaining 4.24%. Equities were supported by the US$1.9 trillion economic stimulus package rolled out by the Biden administration as well as the continued speedy rollout of vaccinations.

In the meantime, the Biden Administration is considering a further multi-trillion dollar infrastructure spending package which is expected to further support US economic growth.

Over in Europe, returns were positive among equity benchmarks in the region as the DAX Index and the Euro Stoxx 50 took the lead with gains of 8.86% and 7.78% respectively.

Returns were mostly positive across geographic mandates in March with North American and European hedge funds gaining 1.56% and 1.37% respectively while Asia ex-Japan hedge funds were down 0.90%. Across strategies, event driven and long short equities outperformed their strategic peers with returns of 1.59% and 1.26% respectively throughout the month.

Roughly 64.3% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in March, and 15.3% of the hedge fund managers in the database were able to maintain a double digit return in 2021.

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