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Hedge Funds Advance In May Led By Equity And Event Driven Strategies

Industry tracker HFR published data showing hedge funds advanced in May, extending their April gains. The HFRI Fund Weighted Composite Index gained +2.5% in May, led by Equity Hedge and Event-Driven strategies.

The HFRI Equity Hedge (Total) Index gained +3.9%, bringing the two-month gain to +11.1%. Equity Hedge performance was led by Multi-Strategy, Technology, and Fundamental Growth exposures. Event-Driven strategies also posted strong gains for the month, with the HFRI Event-Driven (Total) Index advancing +2.9%, led by Special Situations and Activist sub-strategies.

The HFRI Diversity Index, an index of funds managed by women and minorities, advanced +3.4%, while the HFRI Women Index, an index of funds run by women, gained +1.6%.

“Hedge funds extended recent gains through May as an acceleration of  risk-on sentiment from the March lows drove a surge in the highest beta strategies including Activist, Special Situations, and Growth exposures as businesses globally progressed towards reopening and despite social unrest and civil protests across both the US and Hong Kong/China,” stated Kenneth J. Heinz, President of HFR. “While recent gains have been compelling, the financial markets environment remains both fluid and opportunity-rich across asset classes, with the tailwinds of policymakers committed to accommodative interest rates and a resurgent retail consumer contrasting against the risk of additional virus impact or destabilizing social unrest. Institutions are likely to make or increase allocations to funds which have demonstrated their ability to navigate this volatile and dynamic geopolitical environment.”

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