Hedge funds reported the best first half since 2009 as activist strategies and stock bets pay off.
Funds rose 5.7% in the six months through June 30, according to Hedge Fund Research Inc.'s asset-weighted index of managers; its fund-weighted index gained 7.6% over the same period. Breaking down the numbers, fund performance was led by equity hedging strategies, with year-to-date performance up 9.4%.
"Hedge funds posted broad-based gains to conclude the strongest first half of a calendar year, with varied and wide range of leadership including equity, technology, M&A-focused, trend-following, quantitative and blockchain/cryptocurrency exposures," Kenneth Heinz, HFR's president, wrote in a release.
Hedge funds posted broad-based gains to conclude the strongest first half of a calendar year, with varied and wide range of leadership including equity, technology, M&A-focused, trend-following, quantitative and blockchain/cryptocurrency exposures"
"It is likely that the W-shaped equity market pattern will continue throughout 2H19, with funds tactically positioned to benefit from opportunities presented leading industry performance and growth," he added.
"It's a stock-picking market, definitely," Rob Christian, head of investment research at K2 Advisors, said on Bloomberg. The Federal Reserve's surprise pivot on interest rates, taking a hike off the table for now and instead stoking expectations of a cut, has "been most favorable for equity long-short managers, and particularly managers with a growth tilt."
Event-driven strategies — including activism — are up more than 6% this year.
The advance marks a turnaround from last year when the industry, pummeled by short bouts of volatility, saw its worst performance since 2011. But the gain pales in comparison to the S&P 500 Index, which returned almost 19% in this year's first six months.