(Click on right here to subscribe to the Delivering Alpha e-newsletter.)
The hedge fund business attracted its largest inflows in seven years throughout the first quarter as buyers sought draw back safety amidst a volatility spike triggered by fears of inflation and rising charges in addition to geopolitical tensions.
The $4-trilion group noticed complete capital inflows of $19.8 billion throughout the first three months of 2022, the highest quarterly influx since the second quarter of 2015, in accordance with hedge fund knowledge agency HFR.
The large curiosity in hedge funds got here as the bull market was threatened by the Federal Reserve’s aggressive tightening, Russia’s invasion of Ukraine in addition to stunning 40-year-high inflation. The S&P 500 suffered a correction and misplaced 5% in the first quarter, marking its worst quarterly efficiency since the begin of the pandemic in early 2020.
Hedge fund managers took good benefit of the choppiness in danger belongings in the first quarter, posting a slim achieve of 0.3% general, in accordance with HFR. Macro technique, together with commodity buying and selling advisor and systemic funds, was a standout winner with a 9.1% return throughout the interval, its greatest first-quarter efficiency since 1993, HFR stated.
“We think the current investment environment — higher rates, higher inflation, and higher volatility — speaks in favor of hedge funds as an effective diversifier to reduce overall portfolio volatility,” stated Mark Haefele, UBS World Wealth Administration’s chief funding officer.
Citadel’s multistrategy flagship fund Wellington gained 4.7% in the first quarter with all 5 of its underlying methods — equities, credit score, fastened revenue and macro, commodities and quantitative — being optimistic for the interval, in accordance with an individual aware of the returns.
David Einhorn’s Greenlight Capital notched a 4.4% achieve in the first quarter, pushed in half by brief positions and index hedges, the supervisor stated in an investor letter obtained by CNBC.
In the center of January, Greenlight added extra index hedges and elevated its macro positions in company credit score default, whereas directing its analysis efforts to focus on brief concepts, Einhorn stated.
