Global Investment Report’s 2022 Annual Hedge Fund Survey: Mid-Year Update

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A First Half of Historic Divergence

August 2022

The top 50 broad strategy funds – determined by highest historical performance through 2021--outperformed the market by 21 percentage points through the first six months of 2022

Summary: July brought some relief: a market rally, a soaring jobs report, and inflation numbers that didn’t accelerate as commodity prices continued their decline. This may suggest to some investors we’re past the worst of the bear market. But inflation remains stubbornly high, rising interest rates are threatening recession, food and energy insecurity are growing more acute, and serious supply chain issues remain. Somewhat forgotten: The tragic six-month Russian war against Ukraine shows no signs of letting up, exacerbating macroeconomic and security problems and raising geopolitical tensions. All of this has contributed to one of the market's worst first-half starts since the Great Depression. More remarkable that the Top 50 Hedge Funds ended the first half of 2022 in the black, outpacing the market by 21 percentage points.

Source of outperformance: Multistrategy, volatility arbitrage, and global macro funds propelled the Top 50 into positive territory while the market collapsed.


A recent Financial Times headline exclaimed, “Investors Grow Frustrated with Hedge Funds after Historic Losses.” The story’s lede: “Hedge funds are heading for one of their worst years of performance on record.”

A number of celebrated funds are making a mess of things. According to the FT, Daniel Loeb’s Third Point fund declined 20%, Lee Ainslie’s Maverick Capital was down 35%, and Chase Coleman’s Tiger Global can’t seem to get out of its own way, having lost half its value during the year’s first six months.

But the article was not seeing the whole picture.

The financial media’s penchant for hedge fund schadenfreude is a key reason behind this survey’s perennial look at pockets across the industry that merit attention.

The BarclayHedge hedge fund index for the first half of 2022 reported average returns of -9.6%. That’s much better than the S&P 500’s decline of 20%--the benchmark’s worst first-half performance since 1970. Even more compelling: the industry’s bellwether strategy--equity long/short--declined by just -3.5%. This echoes what happened the last time stocks plunged. The S&P was down -37% in 2008 while equity long/ short funds lost less than -12%.

The Top 50 funds identified in this year’s annual hedge fund survey-- comprised of the strongest long-term performing broad-strategy funds through 2021-- collectively outpaced the market during the first six months of 2022 by 21 percentage points. This built upon the 50’s seven-plus percentage point edge over the S&P 500 after the first quarter.