Hedge Funds Post Worst Third-Quarter Performance in Three Years

(Bloomberg) -- Hedge funds had their worst third quarter since 2015, rising just 0.3 percent on average amid surging bond yields and a trade war with China.

The industry gained 1.7 percent during the first three quarters of 2018, on an asset-weighted basis, according to a report Friday by Hedge Fund Research Inc., down from 4.4 percent over the same period last year.

Key Insights

• Macro funds were flat in the first nine months, making them the worst performing strategy.
• Relative-value hedge funds led the bunch, returning 3.7 percent for the year. Event-driven funds rose 3.6 percent.
• Equity hedge funds were up 2.5 percent for the year, spurred by tech and health-care strategies.

In Depth

• In the third quarter of last year, the industry returned 1.7 percent. The last loss for the quarter was in 2015, when funds fell 3.1 percent.
• The S&P 500 was up 7.7 percent, with dividends reinvested, for the quarter.

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• Losses at David Einhorn’s Greenlight swelled to 26 percent, on pace for its worst year on record.
• Distressed-debt funds, which rode winning bets this year on Puerto Rico and energy companies, are taking a breather waiting for the next crisis.

To contact the reporter on this story: Krista Gmelich in New York at kgmelich1@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Melissa Karsh, Vincent Bielski

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