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The Pain Continues: Here Are The Best And Worst Performering Hedge Funds Of 2018

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February was the worst month for the hedge fund industry in years (and an absolute disaster for trend-followers and CTAs). Unfortunately, March wasn't much better, and hedge fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its mid-month highs and hedge funds into the red for the year.

According to Bloomberg data, the broader HFRX Global Hedge Funds Index slumped 0.56% in the first quarter, as funds also finished the month of March down 0.75%, their second consecutive decline, despite modestly paring February's 2.19%  losses.

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Not all assets were hurt equally: fixed Income strategies fell 0.10% in March, but ended the quarter in the black. Fixed Income Directional ended the first quarter up 0.75%, while Fixed Income Relative Value rose 1.03%.

Funds styles in the red topped those in the black by 19 to 7 in March, with Short Biased-style funds leading the table at 2.64 percent on the upside. Currency strategies, a subset of CTA/Managed Futures, finished March at the bottom, plunging 6.33 percent. That helped push Currency strategies down 14.7 percent, the biggest drop in the quarter.

Some other details:

Activist-style funds posted the biggest gains in the quarter at 3.67 percent, despite falling 1.66 percent in March. Long-Short funds outpaced the S&P 500 by 174 basis points, finishing the month down 0.80 percent. For the first quarter, Long-Short funds were up 0.30 percent, easily outpacing the S&P 500, which fell 1.58 percent on a total-return basis.

Meanwhile, the high beta, extremely volatilte Commodity Trading Advisors/Managed Futures strategies had the largest monthly swing in either direction from results in February at nearly 550 basis points, ending March down 0.27%, compared with down 5.75 percent in February.

  • Health Care-focused funds rose 0.04 percent for the month, ending the quarter up 4.66 percent, the highest among industry- focused funds.
  • Tech-focused funds were down the most in March, falling 1.05 percent, though it wasn’t enough to push them into the red after gains the prior two months. They finished the quarter up 2.82 percent. 
  • Real Estate funds ended the quarter the lowest ranked among industry-focused funds, down 1.93 percent, despite finishing March up 0.30 percent.

The best indication of just how bad 2018 has been for hedge funds comes from the latest HSBC HF report, which shows that while the best tracked HF is up 13.22% for the year, the worst one is doing far worse, or -18.12%: the always aptly named Tulip Trend Fund.

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Finally, here is a detailed breakdown of the MTD and YTD performance of most marquee names:

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Source: HSBC

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