New York, 15th March 2021
Mark Twain is alleged to have said “Reports of my death have been greatly exaggerated”. 2020 was the year which proved that reports of the death of hedge funds have also been greatly exaggerated.
Increased market volatility caused by the COVID pandemic, optimism over vaccines, US elections and huge government stimulus programs created a set of opportunities for hedge funds to prove their worth. On the whole, they responded well and delivered exceptional returns.
While we are certainly not yet through the far side of the pandemic and the related economic implications, it is clear from our data that Centaur clients performed exceptionally in 2020.
The numbers speak for themselves:
- Almost 10% of our clients generated returns in excess of 50%,
- Nearly 25% of our clients posted returns of over 20%
- More than 35% of our client portfolios grew between 10-20%.
While most strategies produced positive returns, the stand out performers tended to focus on equity long / short based strategies with strong gains in a number of sectors including technology, emerging markets and healthcare. Our data set is broadly in line with published industry data. HFR reports that average equity hedge funds returned 17.49% in 2020, while the fund weighted composite hedge fund index returned 11.61%.
Another encouraging sign for the hedge fund market is that investors seem to have noticed the strong performance. Centaur’s clients saw net inflows in every month of 2020 – including after March when many passive investors significantly reduced their exposures after the violent market correction.
2021 has also got off to an encouraging start with continued strong performance and fund inflows.
Karen Malone, Founding Partner of Centaur, comments: “2020 was an incredibly volatile year as stock markets plunged with the global lockdown and then rebounded dramatically in the following months. This time last year, our clients had to adapt and adjust quickly to transition to mobile working. Centaur stepped up the plate by keeping funds connected with their investors and advisors. Technology played a vital role in this success as we handled the necessary infrastructural and reporting demands that arose with COVID-19. But it wasn’t just about technology - we also got on the phone with clients to walk them through best practices and enable them to resolve issues.”
She continues, “We are delighted to see that our clients have performed so well over the past 12 months, both in North America and Europe. When you add Brexit to the mix, these growth rates prove that the hedge funds industry is both adaptable and resilient. Our team is fully committed to delivering a quality client experience that continuously evolves with our clients. This has been proven time and time again as we adapt to the market volatility that COVID-19 brings. We are in a great position to support our clients through the challenges and growth ahead.”