Hedge Funds End First Half in the Red as Trade War Roils Markets

(Bloomberg) -- Hedge Funds ended the first half in negative territory as the escalating trade war roiled global markets.

Funds declined 0.33 percent for the year and slid 0.64 percent in June, wiping out gains seen in May, according to Bloomberg Hedge Fund Database.

Year-to-date, CTA/Managed Futures strategies remained the worst performer, down 4.1 percent, due in part to currency volatility and weakness in emerging markets. In June, those strategies declined 0.43 percent.

Markets have been on edge for the last several weeks as President Donald Trump has imposed trade tariffs spurring a reprisal from China. Trade issues threaten to spread to other countries. These concerns have overshadowed economic data hinting that global growth is on track as well as the start of earnings season, which push to the forefront when there is a pause in tensions.

Hedge Funds End First Half in the Red as Trade War Roils Markets

Here’s a look at how specific strategies performed.

PeriodCTA/
Managed Futures
Equity
Hedge
Event Driven

Fixed Income Directional
June-0.43%-1.07%0.63%-0.17%
YTD-4.090.142.610.79
12 months4.328.105.783.74
PeriodFixed Income Relative ValueMacroMulti-Strategy
June0.02%-0.21%-0.89%
YTD1.43-1.09-1.25
12 months4.211.021.69

Source: Bloomberg Hedge Fund Database

Overall, five of seven tracked fund strategies by Bloomberg’s Hedge Fund Database saw declines in June. For the first half of 2018, four strategies gained and three reported declines.

Here are how some sub-strategies performed in June:

In the Equity Hedge category:

  • Emerging Market funds slid 2 percent
  • Every one of them reported positive returns in the month, led by Merger Arbitrage, which rose 1.36 percent.
  • Activist funds gained 0.07 percent in June and are up 13 percent for the first half

For more data on hedge funds:

  • NOTE: Go to HFND and select option 3 to see the Bloomberg Hedge Fund Database Snapshot for more details on hedge fund performance
  • NOTE: See HFS to screen for specific hedge funds
  • NOTE: All data are total return including reinvested dividends. June data are the most recent available. July returns become available around August 12.
  • NOTE: “Equity Hedge” refers to a Bloomberg-created term for strategies where the largest subset of funds is L/S Equity and Long-Biased hedge funds

RELATED: For Bloomberg News hedge fund stories, see:

©2018 Bloomberg L.P.