Key facts
- Global hedge funds struggled to deliver positive returns in September.
- Fundamental equity long-short funds lost 0.55% on average last month.
- Computer-driven systematic equity long-short funds gained 3.46% in September.
- The US Federal Reserve signaled potential further rate hikes.
- Surging bond yields and higher oil prices impacted market performance.
- Fears of an AI spending slowdown caused sharp swings in technology stocks.
Global hedge funds faced a challenging September, with fundamental equity long-short strategies posting an average loss of 0.55%, according to Goldman Sachs Prime Services. This performance lagged the MSCI World Index, which fell 1.3% for the month. The market environment was characterized by rising bond yields, elevated oil prices due to geopolitical tensions, and significant volatility in technology stocks, particularly those related to AI. The US Federal Reserve's indication of further interest rate hikes added to market uncertainty.
In contrast to fundamental funds, computer-driven systematic equity long-short funds delivered strong returns, gaining 3.46% in September, marking their best month of the year. Trend-following hedge funds also performed well, with the Société Générale trend index rising over 4%, driven by short fixed income and long energy positions, according to Winton Group.
In Asia, economic uncertainty led to subdued performance, with Morgan Stanley estimating that Asian hedge funds across strategies fell 0.6% through September 25. Within the US tech sector, while electronic equipment and hardware were sold, semiconductor equipment and software attracted inflows. Experts note that the current rate-hiking environment could lead to greater divergence in hedge fund performance, with some benefiting from higher rates while others face increased financing costs.