www.institutionalinvestor.com Open in urlscan Pro
45.60.11.165  Public Scan

Form analysis
0 forms found in the DOM

Text Content

This Year’s Surprising Hedge Fund Winners

 * Subscribe
 * Sign In
 * Register

Toggle navigation

 * Search
   Search
 * Subscribe
 * Sign In
 * Register

   
 * Portfolio
   
 * Corner Office
   
 * Culture
   
 * Premium
   
 * Research
   
 * Video
   
 * Innovation
   


We use cookies If you're happy with cookies click proceed.
Find out more Proceed

This content is from: Portfolio


THIS YEAR’S SURPRISING
HEDGE FUND WINNERS


Hedge fund strategies that outperformed in 2022 required significant investment
in modeling and infrastructure.


 * By Hannah Zhang

October 06, 2022

AddThis Sharing Buttons
Share to FacebookFacebookShare to TwitterTwitterShare to MoreAddThis

Chris Ratcliffe/Bloomberg

Smaller funds, which can invest in niche areas of the market and stick to only
their best ideas, often beat their larger peers. 



In some hedge fund strategies, however, larger funds have significantly
outperformed the smaller ones amid the current market downturn. Take managed
futures, for example. According to data that Nasdaq’s eVestment pulled for
Institutional Investor, the 30 smallest managed futures funds delivered an
average return of only 4 basis points from January to August. Meanwhile, the 30
largest funds in the same category gained an astonishing 20.4 percent.

Larger hedge funds also outperformed — or at least protected capital better — in
the multi-strategy and fixed-income categories, according to Peter Laurelli,
global head of research at eVestment. The ten largest multi-strategy funds lost
2.1 percent year-to-date, significantly better than the entire group’s loss of
3.4 percent. The ten largest fixed-income funds lost an average of 1.5 percent
in 2022, beating the entire group by 4 percentage points. 


In general, hedge funds ranked in the top quartile by assets have demonstrated a
meaningful outperformance compared to those in the bottom quartile. The former
group lost an average of 1.3 percent year-to-date, while the latter lost 6
percent, according to eVestment. 



Sponsored


WHY EM BOND
INVESTORS CAN NO
LONGER IGNORE ESG


Research shows that managers of smaller funds often generate higher returns
because they are nimbler and better positioned to take advantage of short-term
opportunities. Numerous studies, including a 2019 research by Aurum, a fund of
hedge funds, and a 2015 paper by scholars from the City University of London,
show the connection.

But large hedge funds got their revenge this year, according to Daniel Leveau,
vice president of investor solutions at SigTech.

“Being small and nimble is one thing, but at least as important in today’s
market environment is to possess ‘operational alpha,’” he wrote in an email. “It
is not only about having the best investment ideas, but also about having a
highly efficient operational set-up that enables a fund to trade everything
everywhere at scale.”

Jon Caplis, founder and CEO of PivotalPath, said it was an unusual year for
larger hedge funds this year. “Typically, the trend over the last number of
years has been much more toward these smaller funds outperforming,” he told II.
PivotalPath’s Equal Weighted Composite, which measures hedge fund performance
regardless of size, was down 4.4 percent from January to September. In
comparison, the Asset Weighted Composite, which tilts towards the larger funds,
was only down 2.3 percent. “That’s a pretty significant difference between our
two composites,” he said. 



Caplis attributed the outperformance of larger funds to a structural reason. The
high performers in the hedge fund industry this year are mostly multi-strategy
funds or managed futures. These strategies, he said, tend to be adopted by large
funds because they require significant investment in modeling and
infrastructure. “The barriers to succeed in [these strategies] are very high,”
he said.


FILED UNDER:

 * Portfolio




RELATED CONTENT

 * This content is from: Portfolio
   
   
   HEDGE FUNDS DEFY MAJOR INDICES WITH
   RECORD OUTPERFORMANCE LAST MONTH
   
    * Julie Segal
   
   October 26, 2021

 * This content is from: Portfolio
   
   
   HERE ARE THE HEDGE FUND
   SURPRISES FROM 2021
   
    * Julie Segal
   
   December 23, 2021

 * Sponsored
   
   
   IS SHIPPING COST
   INFLATION ABOUT TO PEAK?
   
   
    * Sponsored by William Blair Investment Management
   
   October 11, 2022

 * 

CORPORATE

 * Masthead
 * About Us
 * Careers
 * Investors
 * Management
 * Customer Service
 * FAQs
 * Cookies

RESEARCH

 * Investor Relations
 * Research FAQs
 * Research Insights
 * Subscribe to Research

SERVICES

 * Reprints

ADVERTISING

 * About Thought Leadership
 * Custom Research
 * Display Advertising
 * Contact Thought Leadership

PUBLICATIONS

 * II Research
 * RIA Intel
 * II's Sovereign Wealth Center

EVENTS

 * II Forums
 * II Memberships
 * II Awards
 * TTI/Vanguard

REGISTRATION

 * Register

SUBSCRIPTION

 * Subscribe to Premium
 * Subscribe to Research

SOCIAL

 * LinkedIn
 * Twitter
 * Facebook

© 2022 Institutional Investor LLC. All material subject to strictly enforced
copyright laws. Institutional Investor LLC is part of the Euromoney
Institutional Investor PLC group. Please read our Terms and Conditions, Modern
Slavery Act Transparency Statement, and Privacy Policy before using the site.