(Reuters) - Macro hedge funds made money in January, data provider HFR said on Monday, bucking the trend of widespread industry losses as markets succumbed to a wave of volatility triggered by high inflation and a steep rise in U.S. interest rate expectations.
The HFRI Macro (Total) Index rose 0.85% in the month, led by a 5.52% leap in the Commodity Index. It marked the best start to a year for macro funds since 2016, and was a rare shining light amid the gloom.
The wider HFRI Composite Index fell 1.73% last month and the Equity Hedge Index fell 3.43%, HFR said, the biggest January decline since 2016. In the equity space, the Technology Index was the biggest decliner, slumping 7.86%.
Global markets gyrated wildly in January after figures showed that U.S. inflation hit a near-40-year high of 7% and the Federal Reserve opened the door to an earlier start to its policy-tightening cycle.
Total returns for the S&P 500 fell 5.18% in January and the Bank of America (NYSE:BAC) U.S. Treasury index fell 1.9%.
According to a note from Goldman Sachs (NYSE:GS) reviewed by Reuters, equities hedge funds lost 6.22% in January, while some big funds like Tiger Global Management and Melvin Capital Management posted double-digit losses.
Looking ahead for the next few months, hedge funds are focused on inflation and interest rate sensitivity, commodities, merger and acquisition activity, and selective, hedged equity exposures, according to HFR President Kenneth Heinz.
"Funds tactically positioned for these dynamic macroeconomic and geopolitical risks and opportunities are likely to lead industry performance through a volatile first half of 2022," Heinz said.