Ever heard about the word Hedge?
Well, in the context of investing it refers to protecting your finances from critical and risky situations by making an investment. Hedge funds are basically investing the clients’ funds which include insurance firms, banks, HNIs, etc in the alternative that comprises of stocks, debts, bonds, commodities, and other investments by using a variety of tactics and strategies in order to provide against the risks or simply providing a hedge against unforeseen changes happening in the market.
Hedge funds require aggressive management, holding for both short and long positions as investors money is involved as well it’s because of the market ups and downs happening frequently.
You know during the financial crisis investors find it the right time to invest and make fat gains by coming up with the best recession strategy to make investments in the well-managed companies having a low debt and good financial statement with positive cash flow.
Well in this pandemic talking about the hedge fund managers came stronger and made investments and got a big fat return.
In the month of March 2020, the overall fall in the global hedge fund industry is 7.76%. As per HFR’s returns, equity-focussed hedge funds were down by 12% month to date and 15% for the year. In the month of March, when hedge fund managers went for event-driven strategies it gave back around 7%. The merger arbitrage funds strategies gave a loss of about more than 9% since the start of January CTA Index posted a loss of about 1.67%.
But here comes the gameplay where the top Indian hedge fund True Beacon One, which manages $40 million of Indian equities kept 80% of its investments hedged, making it one of the best performers as it outperformed the NSE Nifty 50 Index by 29%.
During Quarter 2 in the year 2020, there were 20 top hedge fund performers. SCGE Management is one of the top Hedge Fund Performers with annual 3 years average return of 166.88%, and performed as 44.30% in Quarter 2.Their major investment was in the sector of Technology of about 69% and 12.7% investment in consumer services. And their lowest share was of 2.067% in other sectors. Whale Rock Capital Management’s annual 3-year return is 38.22%. Their major contribution was also in the sector of technology with 70.9% of the portfolio investment. They had a bit different strategy as they also made investments in the Capital Goods with 5.28% of the total hedge funds and 1.92% in Consumer Durables.
Sylebra HK‘s fund manager Jeff Fieler managed 78.3% of his hedge funds in the technology sector as well he was with the strategy of making an investment in the Finance sectorial with a minute 0.21% of the total. Firsthand Capital Management having a turnover of 11.11% invested a very little of about 0.042% in Finance and 0.62% in Healthcare.
Well after watching the pool of funds being invested in the various sectors by the fund managers, one thing comes to attention that Technology is the key component to get hefty returns. As per the data Technological is the only sector where more than 60% of the investment is made in this pandemic. Following this in the coming 1-2 years, Healthcare and Fintech are the sectors that will fetch us the maximum returns.
Now the question arises if you are the Fund Manager where would you invest?
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