Hedge Fund Industry Gains 2.71% in May, According to Backstop BarclayHedge

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Financial markets see positive signs in economies reopening and government stimulus helping nearly all hedge fund sectors to monthly gains

Stock markets carried April’s momentum into May and hedge funds were among the beneficiaries posting a 2.71% monthly return, according to the Barclay Hedge Fund Index, compiled by BarclayHedge, a division of Backstop Solutions. By comparison, the S&P 500 Total Return Index was up 4.76% in May.

Year-to-date, the hedge fund industry is down 4.67% through May. The S&P 500 Total Return Index is down 4.97% over the same period.

All sectors but two tracked by the Barclay Hedge Fund Indices were in positive territory in May. The exceptions were the Merger Arbitrage Index, down 0.42%, and the Equity Market Neutral Index, losing 0.02% in May.

While bad economic news was present in abundance in May thanks to the COVID-19 pandemic, markets were encouraged by governments’ and central banks’ economic stimulus actions, the first stages of easing of pandemic-related shutdowns and hopeful signs in the effort to develop a vaccine for the novel coronavirus.

“Equity markets continued to seize on optimistic news as they rebounded from their initial pandemic downturn, while oil prices responded positively to the combination of production limits and renewed business activity,” said Sol Waksman, president of BarclayHedge. “The result was another positive month for hedge funds.”

With the world in the throes of a global health crisis, it’s not surprising the Healthcare & Biotechnology Index set the pace among hedge fund sectors in May with a 5.74% return. Other leading gainers in May included the Technology Index, up 4.81%, the Pacific Rim Equities Index, gaining 4.62%, the Equity Long Bias Index, returning 4.14%, and the Event Driven Index, up 4.12%.

Most hedge fund sectors remained in the red year-to-date through May, though six sectors bucked the trend. Leading the year-to-date gainers was the Volatility Trading Index, up 10.42%, followed by the Technology Index, gaining 5.27%, the Fixed Income Arbitrage Index, returning 4.80%, and the Healthcare & Biotechnology Index, up 3.53%. Also posting year-to-date gains were the Option Strategies Index, gaining 2.48%, and the Global Macro Index, returning 1.58%.

Among sectors in the red for the year, some of the largest drops were in the emerging markets. The Emerging Markets Latin America Index was down 22.44%, the Emerging Markets Global Equities Index was off 14.83%, the Emerging Markets MENA Index lost 12.92%, the Emerging Markets Eastern European Equities Index was down 11.63% and the Emerging Markets Global Index was off 11.16%.

For a complete table of BarclayHedge Hedge Fund and Sub-Index results for May, as well as historical returns, click here.

About Backstop Solutions

Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to investment consultants, pensions, funds of funds, family offices, endowments, foundations, private equity, hedge funds and real estate investment firms.

BarclayHedge, a division of Backstop, currently maintains data on more than 7,100 hedge funds, funds of funds and CTAs. The BarclayHedge Indices are utilized by institutional investors, brokerage firms and private banks worldwide as performance benchmarks for the hedge fund and managed futures industries.

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