By Carolina Mandl
NEW YORK, Feb 7 (Reuters) - Global hedge funds posted a
solid 2.8% gain in January, but they missed out on the stellar
rally that broader stock market indexes posted to start the year
because the funds were mostly positioned for a continued bear
market, data provider HFR said on Tuesday.
All four major hedge fund strategies ended the month higher,
with equity hedge funds as the top gainer, up 4.24%, in a fresh
start for a category that posted major losses in 2022.
Last year, hedge funds posted their worst performance since
2018, mainly dragged down by equities as portfolio managers
struggled to place bets amid market turmoil.
"Equity hedge funds led strategy gains for the month, as
investors positioned for an improved equity market environment
in 2023, including a moderation of interest rate increases and
slowing of generational inflation," HFR said in a presentation.
Still, the main Wall Street indexes far outperformed hedge
funds. In January, the Nasdaq rose 10.7%, in its best
January since 2011, while the S&P 500 advanced 6.18%.
Data from Goldman Sachs' prime brokerage showed that last
month hedge funds massively abandoned their bets against stocks
as they became too expensive amid a rally. Short covering
reached its fastest pace since 2015, surpassing the speed seen
during the meme stock frenzy.
Hedge funds' bearish bets prevented them from posting higher
returns in January.
Event-driven strategies, which mostly bet on deals
conclusions or failures and activism situations, were up 3.55%
last month.
Relative value hedge funds, which trade price disparities,
rose 1.95%, while macro hedge funds gained 0.26%, mainly dragged
down by algorithm-driven and commodities strategies.
(Reporting by Carolina Mandl, in New York; Editing by David
Gregorio)
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