Hedge funds see strong performance amid volatile markets in Q2

Hedge funds across various sectors experienced notable gains in Q2, reflecting resilience and strategic adaptation in response to shifting market conditions.

The March Altus Fund was a standout, rising 10.4% during the quarter, bringing its year-to-date (YTD) gain to an impressive 21.8%. This rebound was particularly remarkable given the fund’s 0.3% decline in April. Fund managers capitalized on a favorable earnings season and equities adjusting to the reality of prolonged higher interest rates, boosting performance. Notably, the S&P 500 Health Care Index increased by 2.4% in Q2, contributing to a 5.8% YTD gain. Similarly, the S&P Biotech Index rose 5.3%, slightly reducing its YTD loss to 0.3%. Healthcare hedge funds also gained traction, with a 1.5% increase in Q2, bringing their YTD gains to 6.5%, despite suffering a 3.3% loss in April.

In the digital asset space, Liquid Crypto Fund, managed by Galaxy Digital, posted a remarkable 19.5% gain in Q2. This surge was driven by heightened interest in digital assets following the SEC's approval of Bitcoin ETFs earlier this year. The fund's YTD gains now stand at an impressive 45.8%, closely trailing Bitcoin's YTD gain of 61.8%.

Meanwhile, Man Group's hedge fund business reached a record $47.7 billion in assets under management (AuM) in 2023. This achievement was fueled by a 3.7% increase in AuM, largely due to $2.3 billion in net inflows and $200 million from positive investment returns, despite some offsets from foreign exchange and other factors.

AQR's Apex Fund also made headlines by surpassing $1 billion in assets, recording a 1.1% return in Q2, which contributed to a 14.5% YTD gain. AQR’s Apex, recognized for its multi-strategy approach incorporating the latest research in stock selection, macro, and arbitrage, continues to perform robustly. Additionally, long/short tech funds, although recently underperforming compared to US tech stocks, have demonstrated better risk-adjusted performance over the past three to five years, with a YTD return of 3.3% and a two-year compound return of 7.3%.