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Hedge Funds Begin Second Half In The Green

Hedge funds surged in July to begin the second half of 2020, with the HFRI Fund Weighted Composite Index® (FWC) posting the second highest monthly gain since January 2019 and the 3rd strongest gain since 2010. The HFRI FWC climbed +3.2% for the month. The investable HFRI 500 Fund Weighted Composite Index advanced +2.8 % in July, fully offsetting the 1H20 decline to bring YTD performance into positive territory at +0.1%.

Hedge fund gains were spread across all strategies, led by Equity Hedge and Macro. The HFRI Equity Hedge (Total) Index led strategy performance for the month, surging +3.7%, with strong contributions from Energy and Technology exposures. The HFRI EH: Sector-Energy Index vaulted +5.0% in July, while the HFRI EH: Technology Index jumped +4.1% in July, bringing the YTD return for the tech index to +14.1%, leading all sub-strategies for the year. The HFRI Macro (Total) Index gained +3.5% for the month to increase its YTD return to +2.9%. July performance was led by the HFRI Macro: Multi-Strategy Index, which surged+5.0 %, and the HFRI Macro: Systematic Diversified Index, which advanced +3.9%, the strongest monthly return since January 2015. For the year, the HFRI Macro: Currency Index leads Macro sub-strategy performance with an +8.2% return.

“Hedge funds surged across a wide range of strategies in July, driving the HFRI into positive territory for the year, with strong performance in Technology, Shareholder Activist, CTAs and Volatility, as well as Blockchain/Cryptocurrency, Risk Parity, Risk Premia and liquid alternative products,” stated Kenneth J, Heinz. “Institutional investors are actively looking to increase exposure to hedge funds and alternative strategies in 2H20 as a direct and ongoing result of the intense and extreme volatility from 1H20, including both realized and implied volatility, and positive and negative market cycles. Positive performance for 2020 has contributed to an environment of and expectations for strong industry-wide growth into 2021.”

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