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Hedge Funds

Hedge funds clinch best first half since 2009 as activist strategies, stock bets pay off

Key Points
  • Hedge funds rose 5.7% from January through June, according to Hedge Fund Research Inc.'s asset-weighted index of managers, according to HFR.
  • Funds posted broad gains "to conclude the strongest first half of a calendar year," wrote HFR President Kenneth Heinz.
  • Despite the hedge fund bounce in 2019, the S&P 500 is still well ahead with returns north of 19% including dividends.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York.
Michael Nagle | Bloomberg | Getty Images

Strong, widespread gains in June catapulted hedge funds to their best start to a calendar year in a decade as equity bets, trend-following and activist strategies paid off.

Funds rose 5.7% in the six months through June 30, according to Hedge Fund Research Inc.'s asset-weighted index of managers; its fund-weighted index gained 7.6% over the same period. Breaking down the numbers, fund performance was led by equity hedging strategies, with year-to-date performance up 9.4%.

"Hedge funds posted broad-based gains to conclude the strongest first half of a calendar year, with varied and wide range of leadership including equity, technology, M&A-focused, trend-following, quantitative and blockchain/cryptocurrency exposures," Kenneth Heinz, HFR's president, wrote in a release.

"It is likely that the W-shaped equity market pattern will continue throughout 2H19, with funds tactically positioned to benefit from opportunities presented leading industry performance and growth," he added.

Source: HFR

The stronger 2019 gains marked a sort of rebound for the industry, which slumped through 2018's market volatility and suffered its worst performance since 2011. Despite the hedge fund bounce in 2019, the S&P 500 is still well ahead with returns north of 19% including dividends.

Activist hedge funds like Nelson Peltz's Trian Fund Management and Bill Ackman's Pershing Square Capital Management rose 11.4% as group in the first half of the year. Event-driven strategies — including activism — are up more than 6% this year. Ackman's fund was up more than 45% in the first half.