By Maiya Keidan

TORONTO, (Reuters) – November’s worst performance for global hedge funds since the first time that the COVID-19 virus had affected economies and brought down the economy was November.

Early data from PivotalPath shows that Hedge Funds are expected to be down 1.6% to 2 % in November. This is their worst month performance since March 2020.

These potential losses could be a setback to what has been an excellent year of performance. Data from HedgeFund Research (HFR), showed that the average hedge fund has increased 11.4% over 10 months. This is compared to the 11.8% of last year, and 10.5% in 2019.

The losses are “quite widespread”, said Robert Sears, chief investment officer of London-based Capital Generation Partners, which invests in hedge funds. Although some of our managers had some positive performances, I believe that overall it will be lower for all of us.

The fell 3.9% from its record high in November as Omicron worries hit stocks in the month’s final days, and notched a nearly 1% loss for the month as a whole. Some areas of the market, however, were harder hit, with the S&P’s energy sector losing 6.2% last month and financials losing 5.9%.

Volatility also increased across all asset classes in November, due to uncertainty about Federal Reserve Monetary Policy driving swings both in stock and bond markets.

Some equity-focused funds suffered from market swings that were not in their favor. They lost bearish bets against stock stocks, but they unexpectedly recovered.

Jean Baptiste Berthon is a senior strategist with Lyxor Asset Management in Paris, an investment firm that invests in hedge funds. He stated that European and U.S. long short strategies experienced losses of around 1.5% to 2.2% between Dec. 1 and Nov. 25.

The shares of Moderna Sears stated that some hedge fund bets were made against (NASDAQ:) and it jumped by 30% between November 18th and November 30. According to S3 Partners data, the short interest in Moderna was 4.1% of its float prior to Nov. 18.

Berthon said that computers-driven trend-following Hedge funds suffered an “important” drop in performance between Nov. 25-Dec. 1. This was due to losses in fixed-income, commodities, and equities. It created a “perfect Storm”.

He said that so-called “macro” hedge funds which place bets on macroeconomic trends lost close to 2%, mostly due to bond positioning. However, merger-arbitrage, which call on deals, was marginally higher.

Berthon indicated that hedge funds may reduce risk to protect returns after a strong year.

He stated that “we’re three weeks away from the end of this year so it’s unlikely funds will be trying to be heroes or trying to reinstate major play in order to capture the rebound.”