Hedge funds running less than $1bn gained almost twice as much as their Billion Dollar Club (BDC) rivals in August, according to HFM Insights.
In a notably strong month for the emerging funds industry, sub-BDC funds rose 0.8%, compared to 0.5% for funds with more than $1bn. The global industry averaged a 0.8% gain on a non-weighted basis. Relative value/arbitrage funds (up 2%) and eventdriven (1.4%) drove the gains across all fund sizes. Fixed income and credit lagged, edging forward just 0.2%. None of the broad strategy groupings declined in a generally very strong month for the industry. Sub-BDC funds are ahead of larger peers on both a year-to-date and 12-month basis.
Event extends lead: Event-driven is the top BDC strategy year-to-date, up 13.5% (long-short equity is next, up 12.4%). They returned to form in August after a July wobble sparked by the collapse of the Aon/Willis Towers Watson deal. The outlook for merger arbitrage improved again in August due to heightened deal activity and welcome regulatory news, according to Man Group.
Long/short top among sub-BDC funds: Long/short equity is the top-performing sub-billiondollar sector so far this year, up 12.5%. Managers in the strategy cut net and gross exposures amid an unsettled market picture last month. Continuing fears over the Delta variant, central bank policy and Afghanistan fuelled risk sentiment, even as equity indices reached another high. There have also been some strong 12-month numbers among sub-BDC long/short funds, which has boosted the strategy.