Hedge Funds Post Best First Half in Decade
Global macro has come back to life very quietly.
(Bloomberg) -- Hedge funds reported the best first half since 2009 as equity managers capitalized on the surge in stocks.
Funds rose 5.7% from January through June, according to Hedge Fund Research Inc.’s asset-weighted index of managers. Equity funds were the best-performing broad strategy, gaining almost 9% in the period.
“It’s a stock-picking market, definitely,” Rob Christian, co-head of investment research and management at K2 Advisors, said on Bloomberg Television. The Federal Reserve’s surprise pivot on interest rates, taking a hike off the table for now and instead stoking expectations of a cut, has “been most favorable for equity long-short managers, and particularly managers with a growth tilt.”
Here is how some equity hedge funds did, according to investor letters and people familiar with the matter:
Fund | June (%) | First half (%) | Strategy |
---|---|---|---|
Lucerne Capital | 9.2 | 33 | Europe-focused equity |
Viking Global Equities | 6.2 | 17.3 | Equity |
Cadian | 5.9 | 17 | Equity |
SoMa Partners | 4.6 | 15.1 | Equity |
Heard Opportunity | 3.6 | 11.3 | Special situations, equity |
Renaissance Institutional Equities | 1.4 | 5.3 | Quant equity |
The advance marks a turnaround from last year when the industry, pummeled by short bouts of volatility, saw its worst performance since 2011. But the gain pales in comparison to the S&P 500 Index, which returned almost 19% in this year’s first six months.
Activist hedge funds -- which tend to snap up portions of a company and pressure it to make changes -- rose 11.4% in the first half, according to HFR. They fall under the broader strategy of event-driven managers, which rose 6.6% this year. Bill Ackman, who had lost money for four straight years, roared back to life, gaining 45%.
Fund | June (%) | First half (%) | Strategy |
---|---|---|---|
Pershing Square | 8 | 45 | Activist |
Engaged | 8.6 | 27 | Activist |
Blue Harbour Active Ownership | 8.3 | 21 | Activist |
“Global macro has come back to life very quietly,” K2’s Christian said. Ex-Brevan Howard partner Ben Melkman saw his hedge fund, Light Sky Macro, beat his former employer this year, making 12.5% after two years of losses. Still, macro managers in general rose about 3% in the first half, remaining the worst-performing strategy, according to HFR.
Fund | June (%) | First half (%) | Strategy |
---|---|---|---|
Kirkoswald Global Macro | 5.6 | 13 | Macro |
Light Sky Macro | 5 | 12.5 | Macro |
Graham Tactical Trend | 4.7 | 11.4 | Quant macro |
Pharo Gaia | 5 | 10.3 | Macro |
Brevan Howard Master | 3.9 | 9.3 | Macro |
Pharo Macro | 3.1 | 8 | Macro |
Element | 2.7 | 6 | Macro |
Preliminary figures from the Bloomberg Hedge Fund Indices show that the industry gained 6.4% for the first six months and advanced 1.8% in June.
Spokesmen for the hedge funds declined to comment.
To contact the reporters on this story: Melissa Karsh in New York at mkarsh@bloomberg.net;Hema Parmar in New York at hparmar6@bloomberg.net;Katia Porzecanski in New York at kporzecansk1@bloomberg.net
To contact the editors responsible for this story: Alan Mirabella at amirabella@bloomberg.net, Josh Friedman, Dan Reichl
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