The Blubber

Per Reuters

Many investors have reportedly struggled in the market as inflation and other international factors have affected the overall economy's performance. Aside from individuals, even global hedge funds are expected to reach their worse performance in 14 years this 2022.

The reportedly "worst performance" comes as many factors have affected the market, including the effect of interest rates hitting asset prices. Although hedge funds were seen struggling, they did not take as big of a hit as the equity and bond markets during the same period.

Not all hedge funds reported bad performance. Those specific hedge fund strategies that invested in commodities and currencies reported a good 2022 performance as the price of oil and currency difference saturates.

The last time that the yearly price returns of hedge funds performed so poorly was in 2008, which still saw a performance shoot-up a year later. Cambridge Associates managing director of hedge fund research, Meisan Lim, shared that bonds and equities have a particular sensitivity.

Lim: "More than at any time in recent history, both equities and bonds have been very sensitive to macro events, particularly to inflation prints,"

Janus Henderson Investors' head of Asia, Andrew Hendry, gave another statement regarding the performance of trend following. Hendry is responsible for a long-short Global Multi-Strategy Fund worth 900 million euros, or about $955 million USD, serving as its global asset manager.

Hendry highlights two major factors for the performance of funds in relation to trends, the strong prices of commodities and the weak bonds.

Hendry: "Trend-following works on the idea that markets process information inefficiently and at different speeds, and markets that move in one direction to start with, are more likely to continue to move in that direction,"

Global hedge funds' net assets fell by 4.8% during the first three quarters of 2022. This resulted in an outflow of $109.8 billion, dropping its net assets down to $4.3 trillion, according to data from Preqin.

Resources:

Reuters

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