FAIRFIELD, IOWA AUGUST 10, 2022
Following a challenging second quarter, the hedge fund industry came back into fighting form in July, advancing 2.89% on the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions.
Much of the swell came on the back of a seemingly improbable surge in global equity markets. The MSCI ACWI Index (a measure of global equity performance) was up 6.98%, while in the US the S&P 500 Total Return Index and NASDAQ Composite jumped 9.22% and 12.39% respectively.
“The interplay of macroeconomic news and July’s markets was indeed curious,” reflected Ben Crawford, Head of Research at BarclayHedge. “Raging inflationary pressures in the US remained unbowed by tightening monetary policy, as the Bureau of Labor Statistics reported a 12-month CPI increase of 9.1% (non-seasonally adjusted) in July. The Eurozone was just behind, reporting 8.6% inflation. Then Q2 GDP readings showed that the US economy’s GDP contracted -0.9% (annualized) in Q2, following a -1.6% retracement in Q1. Two consecutive quarters of GDP shrinkage typically form the textbook definition of an economic recession. While prices on a number of key commodities drooped in anticipation of flagging demand, equities popped, as if in open defiance of the onset of a recession.”
For the year to date, hedge funds are down -6.95% through July, though they continue to fare better than the S&P 500 Total Return Index, which despite July’s great performance remains down -12.58% for the year.
Hedge fund subsectors gaining ground in July outnumbered those in negative territory by better than two to one. Among the leading gainers the Technology Index was up 11.44%; the Healthcare & Biotechnology Index advanced 4.30%; the Equity Long Bias Index gained 4.17%; the Balanced (Stocks & Bonds) Index was up 3.46%; and the Event Driven Index returned 3.16%.
Subsectors in the red for July included the Emerging Markets Eastern Europe Index off -1.83%; the Distressed Securities Index down -1.23%; and the Fixed Income Arbitrage Index which shed -0.31%.
For the year-to-date interval, the vast majority of subsectors continued to be underwater through July. Among those hanging on to profits were the Global Macro Index, which has returned a combined 6.83% in 2022; the Equity Market Neutral Index up 1.30%, and the Emerging Markets MENA Index returning 0.80%.
Subsectors losing ground so far in 2022 included the Emerging Markets Eastern European Equities Index down -38.44%; the Healthcare & Biotechnology Index -17.17%; the Emerging Markets Global Index -14.46%; the Technology Index -14.17%; and the Emerging Markets Asian Equities Index -13.71%.
“While the sharp upswing in the value of equity markets was certainly a boon for many hedge funds, dismal first half performance has most subsectors still mired in losses,” said Crawford. “As for whether equities can continue their ‘devil may care’ attitude toward macroeconomic indicators, only time shall tell.”
For a complete table of BarclayHedge Hedge Fund and Sub-Index results for July, as well as historical returns, click here.
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Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to investment consultants, pensions, funds of funds, family offices, endowments, foundations, private equity, hedge funds and real estate investment firms.
BarclayHedge, a division of Backstop, currently maintains data on more than 6,900 hedge funds, funds of funds and CTAs. The BarclayHedge Indices are utilized by institutional investors, brokerage firms and private banks worldwide as performance benchmarks for the hedge fund and managed futures industries.
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