Data provided by the EDHEC-Risk Institute shows that long/short equity returned 3.4%, and equity market neutral and event-driven posted 1.6% and 2.26% respectively, the highest returns in the past eight months.
The funds of hedge funds sector, meanwhile, made a 2.15% gain in the first month of the year, its highest since May 2011.
CTA global, which had registered losses for the ten months until December, generated positive returns for the second consecutive month at 1.86%.
The news is likely to buoy investors and fund managers frustrated by performance in 2012. Hedge fund returns lagged behind those of the S&P 500 throughout the year, and in a survey conducted by research firm Preqin, 41% of investors stated they were disappointed with hedge fund returns in 2012.
Investors’ concerns
Performance was also named the number one issue facing the industry going into 2013, with just under half of investors (47%) and 60% of fund managers citing this as their top concern.
Amy Bensted, head of hedge fund research at Preqin, said: “We’re expecting strategies which rely on equity plays – like long/short equity and particularly long-biased funds to do well in the year ahead. The outlook for the macro sector is a bit more unclear: it had a disappointing 2012, and a relatively slow start to 2013. If this continues throughout the rest of the year it could lead to another year where macro strategies lag other major hedge fund styles.
“Funds of funds have had a solid start to the year and this will certainly need to continue throughout 2013 to woo back an increasingly sceptical institutional audience. There is some evidence this month that funds of funds can offer value to investors in fund selection, with funds of hedge funds with a specific macro focus outperforming single manager macro benchmarks in January.”
Stock market momentum
Stock performance was less consistent, although there was significant momentum within the market as the S&P 500 reached a five-year high up 5.18%. Risky credit registered a slight improvement (Credit-Spread Index 0.21%), while convertible bonds benefited from their equity components, with returns of 2.53%, and commodities rebounded significantly, posting 4.45%.
High grade bonds lost some ground, however, (Lehman Global – -0.81%, Lehman US: -0.64%) while the dollar was almost flat (-0.04%)
