All hedge fund strategies gained for February with especially strong performance for systematic CTA’s and fundamental growth strategies as measured by the HFR indices. Managed futures showed gains because both equities and fixed income markets trended higher for the month. The fundamental growth strategy seemed to be positioned to take advantage of the global reflation trade. Other winners included market directional and distressed restructuring strategies.
With good performance in both January and February, most hedge fund strategies are positive for the year. The only exception is merger arbitrage where new opportunities have been limited during these first two months of the year. Performance is within an expected range given historical market betas. However, it is unlikely that these positive gains for all strategies will continue given the wide differences in styles and market exposures.