By Senad Karaahmetovic

Hedge funds continue to struggle in May. According to HFR’s report, their losses increased to 3% this year as investors react to the possibility of recession risk.

Due to volatility increases in many financial markets last month, the composite index which tracks hedge fund performance was down 0.588%. This pushed all categories of funds into the red. However, 40 percent of hedge funds that were compiled experienced gains.

The HFR reports that equity hedge funds suffered a 8% drop in performance during the first five month of 2022. This makes them the most underperforming category. However, this category did not suffer as much as the benchmark index (which plummeted almost 13% in that time).

The headwinds for hedge funds exposed to high-growth sectors like technology and healthcare this year have been felt by many. Tiger Global Management, one of the most prominent firms in the sector, suffered a 14% loss and 52% losses since the beginning.

HFR president Kenneth Heinz stated that the hedge fund performance of U.S. equity continued through extreme volatility in May. Managers navigated not only the Russia/Ukraine conflict, record energy prices, generational inflation and rising interest rates but also the increased risk of an economic recession triggered by consumers.

While losing 0.3% in May, Macro hedge fund returns are now up 9.32% for the year.