Hedge Funds Slip in September as Macro Strategies Gain
Hedge funds posted mixed results in September, with gains among macro and commodity trading adviser strategies failing to offset losses elsewhere. The HFRI Fund Weighted Composite Index declined 0.7%, extending a choppy stretch of performance since July, according to HFR.
Despite the monthly setback, the composite remained up 7.13% through September as inflation and geopolitical pressures affected equity and bond markets. Technology-focused equity hedge funds led year-to-date performance, with the HFRI EH: Sector–Technology Index gaining 16.76%.
Macro managers outperformed as traders responded to interest-rate spikes and shipping disruptions following the shutdown of the Strait of Hormuz. The HFRI Macro Total Index rose 2.7% in September, bringing its gain for the first nine months to 12.9%.
HFR President Kenneth Heinz said an unusually high correlation between oil prices and interest rates, departing from their historical relationship, helped systematic trend-following and commodity managers extend gains.
“With bond market pressure and geopolitical risks likely to persist, potentially leading to increased dislocations and dispersion, we expect investors to continue favoring managers whose performance is uncorrelated to these shocks,” Heinz said.
Equity hedge strategies struggled. The HFRI Equity Hedge Total Index fell 1.9%, led by a 7% decline in healthcare strategies and a 2.8% loss for fundamental value managers.
Technology strategies provided a partial offset, rising 2.1% during the month. Equity market-neutral managers edged up 0.1%, underscoring the divergence within equity-focused approaches.
The performance dispersion comes as hedge fund industry assets continue to expand. HFR reported total assets of $5.6 trillion at the end of the second quarter, up more than $400 billion from the previous quarter. Net inflows totaled $90 billion.
Liquid alternatives also posted modest September losses. The HFRX Absolute Return Index declined 0.1%, while the HFRX Market Directional Index fell 0.3%, rounding out a month of uneven industry performance.