September Shift in Hedge Funds

Following a year of criticism over high fees and the disappointing performance of the global hedge fund industry, September has brought hope for change with outperforming equity hedge and event-driven strategies.

Background: Last Year in Hedge Fund Industry

In the last year, the hedge fund industry has come under increased scrutiny as investors expressed concerns about the costs of their investments. According to the Preqin’s research, nearly half of the poll’s respondents cited fees as a key issue facing the industry over the next 12 months, while 58 percent said that they did not believe their interests were aligned with those of managers. 

“The hedge fund industry has now seen an extended period of lower performance, and four out of five investors recently stated that their hedge fund investments had not met their expectations in this area,” said Amy Bensted, Preqin’s head of hedge fund products, in a statement.

Hedge Funds Advance in September

However, the report from September showed that the equity strategies delivered 1.16 percent returns in September, while event-driven managers returned 0.88 percent. The success factors within the equity strategies were smaller managers, long bias managers and those with a focus on emerging markets. In the event-driven area, distressed debt continued to outperform.

Energy Assets and M&As

The managers primarily targeted energy assets, which had fallen into distress during the recent years of weakened oil prices, and arbitrage between acquirer and target market securities during mergers and acquisition deals. "Notable combinations included German chemical and pharmaceutical company Bayer's $66 billion acquisition of the American agrochemical firm Monsanto and Japanese telco Softbank's $24.3 billion takeover of British technology firm ARM Holdings," CNBC informed.

Sources: CNBC, FinAlternatives, HFR

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