The performance of hedge funds in the first half of the year has been a mixed bag. While some multi-strategy and systematic funds have seen significant gains, macro funds like Caxton Associates and Brevan Howard have faced challenges. Andrew Law’s Caxton Associates, which focuses on macro economics, finished last month flat after a 4% gain in the year up to May-end. On the other hand, Brevan Howard’s Master Fund rose by 0.90% in June, but ended the first half of 2024 down 1.56% for the year. The lackluster performance of these macro funds highlights the difficulties faced in predicting and profiting from macroeconomic trends.
Amidst the varying performance of hedge funds, some multi-strategy funds have stood out with impressive returns. Cinctive Capital saw an 11% increase in the first half of the year, thanks to successful bets on the impact of artificial intelligence on energy, utilities, and technology sectors. Schonfeld Strategic Advisors’ flagship fund also rose by 10.3%, while the AQR Apex Strategy gained 13.5%. These successes show that a diversified approach can yield positive results even in a challenging market environment.
While some hedge funds managed to outperform market benchmarks, many struggled to keep pace with the strong performance of global stock indices. Global fundamental long/short equities hedge funds posted gains of 7.55% in the first half, falling short of the MSCI’s 47-country world stock index, which rose by roughly 11%. The S&P 500, buoyed by tech stocks like Nvidia, soared by 15% during the same period. This disparity underscores the challenges faced by hedge funds in a market dominated by megacap stocks.
Systematic Trading Shines
Amidst the performance disparities in the hedge fund industry, systematic trading strategies have shown particular resilience. Aspect Capital’s Diversified fund, which trades systematically, returned 14.27% for the year up to June. The fund made gains across agricultural markets, currencies, and stocks, demonstrating the efficacy of a rules-based approach to trading. This success highlights the potential for systematic strategies to thrive in volatile market conditions.
Looking ahead, hedge funds are likely to face more challenges after a period of strong market rally. Philippe Laffont’s Coatue Management rose by 9.2% in the first half of the year, indicating continued opportunities for active managers to generate alpha. However, as market dynamics evolve, hedge funds will need to adapt and innovate to navigate the complexities of the increasingly competitive investment landscape. Philippe Laffont’s Coatue Management rose 9.2% in the first half, a source said. Aspect Capital’s Diversified fund, which trades systematically, returned 14.27% for the year to end June, said a source.
Overall, the mixed performance of hedge funds in the first half of the year underscores the challenges and opportunities facing the industry. While some funds have struggled to maintain gains, others have capitalized on market trends to achieve impressive returns. As the market landscape continues to evolve, hedge funds will need to remain agile and adaptive to stay ahead of the curve and deliver value to their investors.