Hedge fund clients of Centaur Fund Services performed strongly in 2020, according to data released by the independent fund administrator.
The company says that increased market volatility caused by the Covid-19 pandemic, optimism over vaccines, US elections and huge government stimulus programmes created a set of opportunities for hedge funds to prove their worth, and on the whole, they responded well.
Almost 10 per cent of Centaur's clients generated returns in excess of 50 per cent, with nearly 25 per cent of our clients posting gains of over 20 per cent. In addition, more than 35 per cent of our client portfolios grew between 10-20 per cent.
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. Centaur's data set is broadly in line with published industry data. HFR has reported that average equity hedge funds returned 17.49 per cent in 2020, while the fund weighted composite hedge fund index returned 11.61 per cent.
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 Coviod-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.”