After a tough first half of 2022, hedge funds and financial markets rebounded in July signaling that investors’ risk appetite has widened, according to a monthly report by PivotalPath, which tracks over 2.5K institutionally-relevant hedge funds, spanning more than $2.5T of industry assets.
That comes as equity returns for July have erased all of June’s losses, with the S&P 500 (SP500) +9.2%, Russell 2000 (RTY) +10.4% and Nasdaq (COMP.IND) +12.4% in what some are calling a relief rally. YTD, though, those indices declined 12.6%, 16% and 21%, respectively against a backdrop of mounting recession fears, worsening economic data and tighter monetary policy.
Looking at a gauge for hedge funds’ performance, the PivotalPath Hedge Fund Composite Index, for instance, rose 0.9% in July vs. a decline of 1.8% in June. The index is now off 2.2% for the year.
Managed Futures (-2.5%) and Global Macro (-0.8%) strategies for July gave back some of their robust performance this year, the report showed. YTD, they’re still up 12.9% and 9.0%, respectively. On the flip side, Equity Diversified rebounded 2.9% and is now off 6.8% for the year.
And while value has outpaced growth so far in 2022, July experienced the reverse with a recovery in growth sectors, PivotalPath noted.
As a testament to growth outperforming value, Ark’s Innovation ETF (NYSEARCA:ARKK) +9.5% fared better than Warren Buffet’s Berkshire Hathaway (NYSE:BRK.B) +8.3% in July, as seen in the chart below. In the past year, though, ARKK (-60.7%) fell significantly while BRK.B (+3.7%) managed to eke out a small gain.
Hedge fund activity during Q2: Activision for Buffett, Soros in Tesla, Tepper likes Netflix.