Hedge funds are generally the volatile first We saw performance improvements in the quarter.
The investable HFRI 500 Fund Weighted Composite Index was up 0.5% in the first quarter. This was led by directional equity hedging and event-driven strategies, both of which navigated a complex and dynamic environment of soaring bank risk, including the failure of Silicon Valley banks and signature banks, general weakness in local banks and the government-facilitated takeover of Credit Suisse by UBS,” the report said.
Directional equity hedging strategies led both capital inflows and total strategic asset growth in the first quarter, with “strategic positioning driven by risk surge in March and potential strength in technology to benefit ,” said HFR.
Total equity hedge capital increased by an estimated $33 billion to reach $1.11 trillion after the first quarter, according to HFR.
The investable HFRI 500 Equity Hedged Index rose 2.9% in Q1, leading all strategic indices for the quarter.
Event-driven strategies focused on unfavorable, often heavily shorted, deep-value equity and credit positions, with assets up $18.4 billion in the first quarter and total event-driven capital was pushed to $1.5 trillion.
The investable HFRI 500 Event-Driven Index was up 1.1% in the first quarter and the HFRI Event-Driven (Total) Index was up 1.7% in the quarter.
Hedge fund capital managed by credit- and interest-rate-sensitive bond-based relative value arbitrage strategies increased $12.9 billion in the first quarter, increasing total RVA capital to $1.5 trillion.
The investable HFRI 400 (US) Relative Value Index was up 1% in the first quarter.
However, macro strategy total capital decreased by $14.3 billion in the first quarter to end the quarter at $663.3 billion.
The HFRI 500 macro index fell 3.5% in the first quarter, negatively attributed to “quantitative, trend-following CTA (commodity trading advisor) strategies and weakness in short fixed income positions,” HFR said.
These performance-based losses more than offset estimated net asset inflows to macro funds of $3.4 billion in the first quarter.
Companies of all asset sizes saw net inflows in the first quarter. The estimated net asset inflows for the largest companies (over $5 billion under management) were $7.4 billion. Firms with $1 billion to $5 billion under management posted an estimated $1.3 billion in quarterly net inflows, while firms under $1 billion recorded net inflows of $330 million.