Hedge Funds Roar in 2019’s First Half

Equity strategies help steer the ship to best H1 gains since 2009.

A stellar June performance proved there’s still hope for hedge funds yet as the industry saw its best first half in a decade.

Hedge funds gained 5.7% in the six months ended June 30, according to Hedge Fund Research (HFR). Its fund-weighted index increased 7.6% over the same duration.

Equity hedging strategies pulled the most weight for hedge funds, pushing year-to-date performance up 9.4%.

“Hedge funds posted broad-based gains to conclude the strongest first half of a calendar year, with varied and wide range of leadership including equity, technology, M&A-focused, trend following, quantitative, and blockchain/cryptocurrency exposures,” said Kenneth J. Heinz, HFR’s president.

The S&P 500 is up 19% over the same duration, hitting 3,000 Wednesday morning upon Federal Reserve Chairman Jerome Powell’s dovish comments, which investors believe is a telltale sign of an upcoming interest rate cut.

“Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened,” Powell said. “Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the US economic outlook.”

The spike is a boon for the hedge fund industry as it has suffered in recent years. Last year was a particularly tough time to be in the business, as market volatility forced many to close in what was the worst industry performance since 2011.

“It is likely that the W-shaped equity market pattern will continue throughout 2H19, with funds tactically positioned to benefit from opportunities presented leading industry performance and growth,” said Heinz.

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