Hedge Funds Weather Volatile January, While Market Neutral Interest Increases

Deutsche Bank’s monthly hedge fund trends report for February found that while the demand for equity long/short managers from 2013 continues, European investors are increasingly interested in evaluating market neutral managers.
By Jake Safane(2147484770)
Deutsche Bank’s monthly hedge fund trends report for February found that while the demand for equity long/short managers from 2013 continues, European investors are increasingly interested in evaluating market neutral managers.

These investors are looking at both fundamental and systematic, seeking a lower net market exposure. These trends fit in with the strong market rally of 2013 and the volatile January that followed the Fed’s QE reduction, says Deutsche Bank.

The report also found that a small but notable number of requests for emerging markets managers came from U.K.-based investors. For those with a longer investment time horizon, emerging markets exposure through hedge funds seems to be trending, while there has been several weeks of outflows from these markets, largely in the form of ETF redemptions.

As for performance, hedge funds maintained their ground in January despite the volatile markets, as the funds Deutsche Bank tracked were roughly flat at -0.24% for the month, while MSCI World stock market index was down -3.48%. And market neutral strategies performed the best, up 1.07%, fitting in with European investors increasing interest. Credit strategies returned 0.83% in January, and distressed strategies were up 0.78%. However, Emerging Markets strategies dropped -1.97% and CTA/Managed Futures fell the most at -2.25%. Still, these fared better than equity indexes.

Regionally, event driven strategies run by European managers fared the best, up 2.38%. and global long/short strategies run by U.S. managers returned 1.68%.

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