Macro hedge funds provided a bright spot in April with the average fund returning +1.52%, according to the latest data from HFR.
April’s performance brings the macro category to +7.89% year to date, by far the strongest of the four primary categories that HFR tracks (equity, relative value, and event-driven being the other three).
Equity hedge strategies fared less well. The HFRI Equity Hedge (Total) Index retreated -1.64% in April, reducing 2024 gains to +3.4%. Event-driven funds lost -1.88% last month, bringing the category down to barely above par at +0.41%; relative value funds added +0.27% to pad 2024 gains to +2.81%.
“Hedge funds posted impressive gains in April led by Macro strategies and the industry’s largest, most established funds as financial markets experienced a crucial inflection point, reversing from the dominant risk-on sentiment in 1Q to a powerful risk-off sentiment as investors positioned for persistent inflations, elevated interest rates, and continued extreme levels of geopolitical risk,” said Kenneth J. Heinz, President of HFR.
“The performance of macro funds is both strong and impressive in that macro contains many of the industry’s largest, most capital concentrated funds. Historically, macro has the lowest correlation to broader equity markets (in the case of April, negatively correlated with equity market declines) and that Macro posted one of its strongest quarters in 20 years in 1Q24, through an environment which was dominated by the complete opposite of risk sentiment than the trends in early 2Q24. This demonstrated positive-optionality and volatility-positive positioning is likely to continue to attract capital from institutional investors looking for exactly what macro is providing through the recent market cycles—specialized participation in powerful gains, portfolio protection/negative correlation in risk-off environments. With both macroeconomic and geopolitical uncertainty accelerating through mid-year, macro represents an ideal portfolio allocation for institutions navigating these volatile and dynamic financial market conditions.”
