January 21, 2022, 21:05

    Equities hedge funds outperform in 2021 despite volatility and retail surge

    Equities hedge funds outperform in 2021 despite volatility and retail surge

    TORONTO, Jan 13 (Reuters) – Stock-picking hedge funds globally outperformed the broader sector with double-digit returns in 2021, despite a year beset by volatility and a new force of unpredictable retail traders flooding into the market to support "meme stocks."

    On average, equities hedge funds made gains of 12.3% in 2021, compared with 10% for peers more generally, according to data from industry tracker eVestment.

    Last year, thousands of retail investors congregated on social media websites to share information on stocks and short-sellers, making the stock-picking process much more hazardous.

    Register now for FREE unlimited access to Reuters.comRegister

    "There were just so many different pot holes that managers could have fallen in to," said Darren Wolf, global head of Investments, Alternative Investment Strategies at Aberdeen.

    "In long-short equity land, you had to deal with a whole bunch of issues throughout the year, starting with the meme short squeezes in January and that had implications throughout the rest of the year."

    Wolf said long-short hedge fund managers navigated last year by reducing their gross exposure and single-name shorts – bets that a stock will fall – and moving into exchange-traded funds (ETFs) as a substitute for those bets.

    For Toronto-based $1.5 billion long-short firm Anson Funds, which made 45.5% in its main $950 million hedge fund in 2021, adjusting for retail investors has become crucial to trading.

    "People have always had this assumption that retail traders aren't a market force, but retail became more active recently,” Moez Kassam, chief investment officer at the Anson Investments Master Fund, told Reuters.

    "This is the new investor crowd and it's here to stay."

    Hedge funds also faced several bursts of volatility where markets took a shock tumble, such as during the sudden emergence of the Omicron variant in November. read more

    Some equities hedge funds, like $2.7 billion UK-based Gladstone Capital Management, benefited from investments in global TMT, consumer and financial sectors in 2021.

    Gladstone made 7% in 2021, and 20.4% over five years, a source with knowledge of the matter told Reuters.

    Register now for FREE unlimited access to Reuters.comRegisterReporting by Maiya Keidan in Toronto
    Editing by Matthew Lewis

    Sourse: reuters.com

    Related posts

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    We use cookies in order to give you the best possible experience on our website. By continuing to use this site, you agree to our use of cookies. You can find a detailed description in our Privacy Policy.
    Privacy Policy