Preqin published its Preqin Global Report 2023: Hedge Funds where demonstrates that, at the end of Q3 2022, commodities trading advisors (CTAs) outperformed all top-level hedge fund strategies, emerging as the winning ticket in a stressed market and during this period, of all fund types, CTA returns climbed +8.2% to September.
2022 was a challenging year as market participants experienced major pullbacks in their portfolios, and investors struggled to find a safe place to protect their capital. Inflation figures spiked in many countries, and the war in Ukraine and geopolitical tensions added to the volatility, the report adds.
Hedge funds felt the pain but managed to absorb some of the shocks in the market. At the end of Q3 2022, Preqin’s all-hedge-funds benchmark declined by -9.3%. Although losing money should never be celebrated, the fact that hedge funds protected investors greatly compared to public investment options should be noted.
Certain hedge fund strategies guard investors, while others disappoint
While CTAs performed exceptionally well, Preqin data also shows that at the end of Q3 2022, macro strategy returns climbed by +4.5%, and relative value rose +0.2%, with generated numbers for investors that helped reduce the damage in many portfolios.
Meanwhile, at the end of Q3 2022, both multi-strategy and credit strategy returns had dropped -3.3% and -5.2%, respectively. Equity and event-driven strategies disappointed many with a respective return decline of -13.9% and -8.7% by the end of Q3 2022.
In terms of asset flows, hedge funds endured a tough first half as net capital outflows totaled $24bn, and the outflows continued in Q3 (-$31bn). The negative performance, along with the outflows, pushed the industry’s total assets under management (AUM) down in 2022. Based on our last official estimate, AUM stands at $4.1tn as of end of Q3 2022, which represents a 4.8% reduction since the end of 2021.
North America funds claim top performance with five-year streak
North America remained the best-performing region for the past five years as funds focused on the region climbed +7.9% on an annualized basis. Despite the good overall five-year annualized number, North America focused managers were not immune to the turbulence of the markets in 2022, with a return decline of -11.4% by end of Q3 2022.
Looking at other markets, Europe-focused funds declined -11.3% by end of Q3 2022, while Asia-Pacific-focused funds performed slightly better relatively speaking, with a decline of -10.0% during the same period.
For Marcelo Soba