Hedge fund losses picked up in February with the industry down 2.81% for the month, according to the Barclay Hedge Fund Index compiled by BarclayHedge, a division of Backstop Solutions. By comparison, the S&P Total Return Index was down 8.2% for the month.
For the year-to-date the hedge fund industry was down 3.00% through the end of February. The S&P Total Return Index was down almost 8.3% over the same period.
All but a handful of hedge fund sectors were in negative territory for February, as what little good economic news to be found in the month was offset by the impact of the spreading coronavirus.
“In ordinary times, news like favorable U.S. manufacturing data and a strong U.S. January jobs report might have provided a boost. But, with the coronavirus, these aren’t normal times,” said Sol Waksman, president of BarclayHedge. “As the month continued—and with it, the spread of the virus—we saw markets in turmoil including the worst week for stocks since the 2008 financial crisis as businesses and investors tried to gauge the potential economic impact of the novel coronavirus.”
Among hedge fund sectors, only four of BarclayHedge’s 31 indices were in the black in for February. In a month marked by extreme volatility, the Volatility Trading Index set the pace among gainers, up 1.38% for the month. Others posting February gains included the Convertible Arbitrage Index, up 1.01%, the Option Strategies Index, with a 0.94% return, and the Fixed Income Arbitrage Index, gaining 0.47%.
Much more common were the sectors in negative territory in February. Among them were the Emerging Markets Latin American Equities Index, down 8.20%, the Pacific Rim Equities Index, off 6.48%, the Emerging Latin America Index, losing 6.22%, and the Emerging Markets Global Equities Index, down 5.77%.
Hedge fund sectors’ year-to-date picture was similar to their monthly performance in February, with the losers far outnumbered by gainers over the year’s first two months. Among the many hedge fund sectors in the red year-to-date were the Emerging Markets Latin American Equities Index, down 9.18%, the Emerging Markets Global Equities Index, off 8.67%, the Emerging Markets Latin America Index, losing 7.81%, and the Pacific Rim Equities Index, down 6.31%.
Among the gainers, the Convertible Arbitrage Index led the way with a 1.61% return through the end of February, followed by the Volatility Trading Index, up 1.57%, the Fixed Income Arbitrage Index, returning 1.35%, the Option Strategies Index, gaining 0.86%, and the Merger Arbitrage Index, up 0.06%.
For a complete table of BarclayHedge Hedge Fund and Sub-Index results for February, as well as historical returns, click here.