Hedge fund indices, in general, showed positive albeit muted gains for the month. The biggest losers were EM and systematic CTAs on the sell-off in emerging market stocks and bonds and the large bond reversal. The largest gainer was fundamental growth which was consistent with growth indices.
Hedge fund performance for the first five months of the year is tilted to the negative with event, distressed, and special situations underperforming. The largest winners are the relative value and multi-strategy indices.
Investors should be underwhelmed with average hedge fund behavior this year. Volatility spikes, some country specific risks, and some choppy markets conditions served not as trading opportunities but as drags on performance. Some of these events could be viewed as true surprises, but the benefit from holding hedge funds has been limited for the year even though the markets have not been directional.