While the overall sector gained ground, there were some categories that fell, such as those linked to cryptocurrencies. Macro funds, which generally did well in 2022, suffered a setback in November.

Hedge funds continued to advance in November, buoyed by investors’ expectations that the pace of US interest rate rises would slow down, industry figures show.

The investible HFRI 500 Fund Weighted Composite Index gained 0.8 per cent for the month, according to the Chicago-based group Hedge Fund Research. The HFRI Fund Weighted Composite Index advanced 0.95 per cent in November, paring its year-to-date fall to -4.1 per cent.

Directional equity hedge and interest rate sensitive relative value arbitrage strategies led performance.

Equity Hedge funds, which invest long and short across specialized sub-strategies, led strategy gains in November, with equities advancing despite volatility across crypto, interest rates and currencies. The investible HFRI 500 Equity Hedge Index jumped 3.8 per cent for the month, while the HFRI Equity Hedge (Total) Index gained 2.7 per cent.

The sharp falls in cryptocurrencies, coming at a time when the FTX exchange drama broke, were reflected in falls in indices. The HFR Cryptocurrency Index fell 13.5 per cent in November. This index has slumped by 52.5 per cent year-to-date through November, contrasting with a 240 per cent gain in 2021.

Fixed income-based, interest rate-sensitive strategies also advanced in November, as interest rates posted sharp declines as generational inflationary pressures showed early signs of easing.

The investible HFRI 500 Relative Value Index gained 1.65 per cent for the month, while the HFRI Relative Value (Total) Index added 1.1 per cent. 

Led by activist and special situations exposures, event-driven strategies, which often focus on out-of-favor, deep value equity exposures and speculation on M&A situations, also gained in November. The investible HFRI 500 Event-Driven Index advanced 1.1 per cent. The HFRI Event-Driven (Total) Index gained 0.8 per cent. 

Macro strategies posted their first decline since July, paring strong year-to-date performance on weakness in quantitative, trend-following strategies; the investible HFRI 500 Macro Index fell 3.7 per cent for the month, paring year-to-date performance to 13.1 per cent; the HFRI Macro (Total) Index fell 2.7 per cent in November. 

Macro sub-strategy declines were led by the HFRI Macro: Systematic Diversified Index, which fell 5.2 per cent for the month, while the HFRI Macro: Active Trading Index fell 4.6 per cent.