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Long/short strategies strongest performers
30 April 2013
Preqin data shows high demand for traditional equity funds
Long/short hedge funds had the strongest start to the year, outperforming all other strategies in Q1 2013, according to data from Preqin.
The alternative investment analyst said long/short equity strategies had delivered average cumulative net returns of 4.43% over the quarter, as well as being the most popular hedge fund strategy among institutional investors. Some 43% of investors planning to invest in hedge funds over the next year said they would favour long/short funds.
Amy Bensted, head of hedge fund products at Preqin, said: “The hedge fund industry saw a broad base of positive returns posted during the first quarter of 2013. The average hedge fund closed the first quarter of the year up 3.35% after long/short and event-driven strategies enjoyed particularly promising periods. Liquid strategies trading on equities, notably long/short equity, are increasingly being sought by institutional investors looking to take advantage of the current market rally.
Long/short equity funds also accounted for the majority (58%) of launches over the quarter, up from 36% in the same period in 2012.
In terms of performance, CTAs delivered the lowest returns, with net returns of 0.21%. Over the past 12 months, event-driven strategies were the highest performers, with cumulative returns of 9.44% and representing 11% of launches in Q1, compared to 1% in Q4 2012.
Other data from Preqin show that more than a quarter (28%) of funds launched over the quarter are managed by first-time fund managers. North America saw the majority of fund launches (81%), compared to 12% in Europe.
Preqin said the slow down in European fund manager launches may have been a result of managers waiting until the implementation of the launch of the AIFMD directive in July.
Bensted added: “As Preqin’s fund launch data demonstrates, long/short strategies represent well over half of known hedge fund launches in the first quarter of 2013; therefore investors targeting this strategy will have a wide choice of funds, both established and emerging, to fill these open mandates.”