Observations:
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67% of funds have reported positive returns YTD. Unfortunately for the sub-strategy, not one of those funds are categorized as Risk Premia, which is both the bottom-performing strategy for October (down 2.4%) and the year (down 14.8%).
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Equity Sector continues to top the charts this year, up 11.2%. Within Equity Sector, Healthcare (up 3.8% in Oct., 14.4% YTD) and TMT (up 0.5% in Oct., 21.1% YTD) are sub-strategies where managers consistently generate both performance and alpha (see a sample of our commentary on the subject here and here). Financials-focused managers have been a drag on performance for the high-level Equity Sector index, with that sub-strategy losing 9.3% YTD. However, October offered a bright spot for the space, as Financials topped our monthly performance rankings with a 3.9% return.
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With an eye toward next year, we are investigating trends in hedge fund performance during periods of divided government. Since 1999, 7 of 11 eras have been marked by such division. We look forward to sharing our findings with you in the coming weeks.
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From March-August, colleagues across the industry have noted the level of high-quality investors attending virtual conferences, exceeding numbers historically seen in person. Since school has been back in “session,” thought leadership and cap intro conferences are still well-attended, but investor response to follow up from managers has been waning. Without the ability to forge connections in person, many managers are finding it hard to break through, even with strong performance. We’re interested to see how relationships between managers and allocators continue to evolve, especially now that it’s imperative to derive context from data, not just conversation. Have you seen funds creatively approach allocator communications, either through content or tactics? If so, please let us know inquiry@pivotalpath.com.