HONG KONG, March 8 (Reuters) - Global hedge funds posted a 0.5% decline in February, driven by weak equity and fixed income performance, as investors turned cautious amid fears that interest rates would stay higher for longer and a possible global recession, data provider HFR said on Wednesday.
The February loss was a reversal of January’s gain and positive momentum in the recent months, but still outperformed the major gauges.
Equity hedge funds lost the most, down 1.3% last month, while macro, event driven and relative value strategies went up, according to HFR.
Within the relative value index, which trade price disparities, fixed income sub-indexes had a mixed performance as inflation and rate uncertainties made the market volatile.
“Hedge funds exhibited strong, defensive outperformance of equity market declines in February, driven by gains in quantitative, trend following Macro," Kenneth J. Heinz, President of HFR, said in a presentation.
"Financial markets experienced a sharp reversal of the risk-on sentiment from January and investors positioned for a continuation of the trends of generational inflation, higher interest rates and economic uncertainty,” he said.
Both S&P 500 and MSCI World indexes dropped over 2% in February.
Separately, data from Goldman Sachs’ prime brokerage showed that hedge funds increased gross trading activity in U.S. stocks and rotated out of Chinese equities and emerging Asia market last month.
U.S.- and European-focused funds fell 1.2 and 0.8%, respectively, while China- and Asia-focused funds slumped 4.7% and 4.2%, leading the decline. (Reporting by Summer Zhen; Editing by Kim Coghill)
