Hedge Funds Up Amid Volatile Markets.  

Hedge funds were up nearly two percent in the month of June.  This means that the industry faced its third monthly gain in a row.  Although the industry aggregate  — as measured by the HFRI Fund Weighted Composite Index — is still down, hedge funds are doing well considering the market circumstances.  Following the economic downturn from the coronavirus pandemic, hedge funds have seen a nine percent recovery in the second quarter.  Success within the industry is scattered, and funds that prevailed through market turbulence in H1 will likely follow a similar trend in the second half.  As stated by HFR president Kenneth Heinz, “Despite the strong Q2 recovery, risks and realised volatility associated with additional virus contagion, social unrest, and the upcoming US election remain elevated.”  Still, all these factors are making the hedge fund industry look dominant.  For instance, equity-focused hedge funds were up three percent in June, yielding a 13.6 percent return in the second quarter.  

Healthcare and Tech

Specific sectors within the industry are particularly successful.  Healthcare and technology equity-focused funds seem immune to market volatility.  Technology funds saw a 17 percent increase in quarter two while healthcare stock were up nearly four percent in the second half.  Additionally, event-driven investors grew 2.54 percent in performance with a 9.57 percent performance in the second quarter.  Event-driven funds also attributed a 1.42 percent increase in June to activist managers.  Better yet, multi-strategy event investors are up 7.64 percent YTD with a 12 percent rise in June.  Further, credit arbitrage funds performed with a 4.3 percent increase in June.

Looking Forward

On the micro-level, hedge funds are doing great; however, the technology and healthcare funds are doing even better.  Investors should still caution on the industry due to heavily uncertain factors in the future.  The macro level is still on the down side for the hedge fund industry.  For instance, credit arbitrage funds are down by about eight percent, year-to-date.  Ultimately, hopes should not be too high.