A ramp-up in short positions against AI-exposed chipmakers helped stock-picking hedge funds ride July’s market maelstrom and deliver positive returns for investors, new industry data show.
Equity hedge funds posted a 2.6% monthly return in July, and have now advanced into double-digit territory on a year-to-date basis, surging 10.3% since the start of January, according to new analysis published by PivotalPath.
Equity-diversified managers (1.3%) and computer-based quantitative equity strategies (0.2%) also made hay amid last month’s stock market selloff. Elsewhere, credit-focused hedge funds climbed 1% in July, as large multi-strategy managers added 0.3%. Meanwhile, on the downside, CTAs and trend-following funds were wrong-footed by the rapid market reversal, falling 1.7% according to PivotalPath data, while global macro strategies also slipped 0.4%.
Overall, PivotalPath’s main industry composite index rose 0.8% in July, and is now up 6.8% over the seven-month period throughout 2024. The average monthly July return of hedge funds making gains was 2.28%, while the average loss of those in negative territory was 2.66%, PivotalPath said.
The hedge fund research and intelligence provider tracks the monthly performances of more than 2,800 institutionally relevant hedge funds, spanning over $2.5 trillion of industry assets, on behalf of over $300 billion in client hedge fund capital.
It found that roughly two-thirds (65%) of all hedge funds monitored by PivotalPath ended July in the black, as many managers correctly positioned for tech-driven drawdown which saw the sustained first-half equities rally abruptly halted, with S&P 500 rising 1.2% and the Nasdaq dipping 0.75% last month.