Strategies such as those in the macro field – where funds try and ride big trends in economics, interest rates and currency moves – performed well during the quarter.
Hedge fund capital continued to rise after gains made in the
first three months of 2024, reaching $4.31 trillion in the second
quarter. Political dramas in the UK, France and US, have played
into the sector’s hands, according to Hedge Fund
Research, the Chicago-headquartered group tracking the
space.
The latest figures show a rise of about $11 billion for Q2 from
the previous quarter.
Relative value arbitrage and macro strategies led performance,
although there were outflows from the equity hedge and
event-driven areas. The HFRI Macro Index Asset Weighted
Index gained by 6.1 per cent in the first half of 2024, alhough
the index was little changed for the second quarter after
posting the largest quarterly gain in the last 20-plus years in
Q1 2024.
(Relative value arbitrage tries to exploit pricing discrepancies
between historically correlated securities; macro strategies
profit from broad market swings caused by political or economic
events. Equity hedge is a strategy whereby bets on market rises
are offset by positioning for possible declines; event-driven
strategies seek to profit from price moves caused by events such
as mergers and corporate takeovers.)
The HFRI Fund Weighted Composite Index® advanced +5.0 per cent in
the first six months of 2024.
One standout sector was the the HFR Cryptocurrency Index, with
returns of 25.5 per cent in the first half of this year,
reflecting strong gains made by cryptos such as bitcoin.
“Even more so than the prior quarter, managers remained focused
on unprecedented geopolitical and election risks and
opportunities, with these not only including
geopolitical/military conflict, but also including ongoing
volatile inflation, interest rates and macroeconomic
considerations which have dominated the past two years,” Kenneth
J Heinz, president of HFR, said.