Hedge funds end one of the weakest years since 2008

North American funds ended 2018 with their worst month post-crisis, with losses of 3.29 percent in December as equity markets were impacted by the Federal Reserve’s interest rate hike, data provider Eurekahedge reported.

The S&P 500 index declined 9.18 percent during the month, affecting the Eurekahedge North America Long Short Equities Hedge Fund Index, which recorded a loss of 4.63 percent.

Hedge funds overall were down 0.82 percent in December, outperforming the MSCI AC World Index, which declined 7.61 percent. Preliminary data suggests that the Eurekahedge Hedge Fund Index lost 3.35 percent in 2018, after the industry was able to generate an 8.5 percent return on average in the previous year. In Asia, concerns over slowing growth weighed on the region’s equity markets and pulled the Eurekahedge Asia ex Japan Hedge Fund Index down 2.82 percent. For the entire year, losses among Asian managers reached 10.66 percent.

European fund managers, meanwhile, were down 0.9 percent. Performance across strategic mandates was mixed in December. While macro hedge funds gained 1.56 percent during the month, event driven hedge funds declined 2.78 percent.

CTA and managed futures hedge funds were up 0.93 percent in December despite a decline in oil prices and a generally weakening energy sector. But for the year, the index was down 3.17 percent as funds saw US$15.9 billion of performance-based losses and US$22.2 billion of net investor redemptions.

Fund managers utilizing AI/machine learning strategies gained 2.17 percent last month, ending a streak of losses, which meant that in 2018 the index was still down 2.97 percent.

The Eurekahedge Crypto-Currency Hedge Fund Index was down 8.74 percent in December, as the bitcoin price dropped to nearly US$3,000 in the middle of the month. The index lost 68.88 percent of its value last year.