Global hedge funds posted mixed results in September as surging bond yields, higher oil prices, and swings in AI-linked stocks drove selling across equities. Systematic, trend-following, and macro strategies posted gains, while fundamental long-short funds lost less than the broader index.
Global fundamental equity long-short funds lost an average of 0.55% in September, according to Goldman Sachs Prime Services. Yet they still beat the market: the MSCI World Index fell 1.3% over the same period.
Computer-driven systematic equity long-short funds moved the other way. They rose 3.46% last month, marking their best monthly performance this year, Goldman Sachs said.
Rate hikes and oil push markets
Central bank headlines dominated September. The US Federal Reserve raised interest rates for the first time since 2023 and signalled more hikes in coming months. The US-Israeli war on Iran pushed oil prices higher and sent Treasury yields to two-decade highs.
Expectations of a slowdown in AI spending also triggered swings in crowded technology positions from the US to South Korea, complicating short-term trades. In the US, hedge funds sold most sectors, but tech split apart: electronic equipment and hardware names were sold off while semiconductor equipment and software attracted strong inflows, Goldman Sachs said.
In Asia, Morgan Stanley said economic uncertainty limited hedge fund performance. Asian hedge funds across strategies fell 0.6% last month through September 25, compared with a 0.2% decline globally.
Macro and trend funds post gains
Some strategies profited from the sharp moves in commodities and rates. Bridgewater Associates' Pure Alpha macro fund returned 18.4% in the first nine months of the year, Reuters reported.
Trend-following funds were also among the biggest winners, as the Société Générale trend index gained more than 4% in September. Short fixed income and long energy positions largely drove the gain, according to Winton Group.
Analysts said the rate hike environment could create greater divergence across the hedge fund industry. Agecroft Partners CEO Don Steinbrugge said: "others face higher financing costs that can materially reduce returns".
Source: Investing.com
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