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In December, global financial markets declined to conclude sharp losses for 2022 as the Federal Reserve raised interest rates, increasing the likelihood of an economic recession in 2023. The US led Equity market declines with Technology posting steep declines for the month and year; European and Asian indices posted more moderate declines. Interest rates rose as the Federal Reserve indicated additional rate increases would be necessary to reduce generational inflation. The US Dollar was mixed against major currencies, falling against the Euro and Swiss Franc while rising against the British Pound and Japanese Yen. Natural Gas, Aluminum, and Lumber led Commodity declines offset by gains in Silver, Coffee, and Lean Hogs.
Hedge Funds posted mixed performance for month with the HFRX Absolute Return Index gaining +0.48% in December, +0.85% for the year, and the HFRX Global Hedge Fund Index declining -0.06% for the month, -4.41% for the year.
HFRX Macro/CTA Index posted a gain of +0.05% for December and +3.75% YTD. The HFRX Macro Systematic/CTA Index posted a slight decline of -0.05% for the month, +16.87% YTD, as the US Dollar saw mixed performance against most major currencies. Commodities was also mixed for the month with gains concentrated in Silver, Coffee, and Lean hogs offset by declines in Natural Gas, Aluminum, and Lumber.
HFRX Relative Value Arbitrage Index posted a marginal gain of +0.01% for the month, -7.72% YTD, from gains in Multi-Strategy managers offset by Convertible Arbitrage strategies. The HFRX Multi-Strategy Index posted a gain of +0.07%, -7.25% YTD, as interest rates increased during the month. The HFRX Convertible Arbitrage Index declined -0.65%, -12.50% YTD, as volatility increased in December.  
HFRX Equity Hedge Index posted a decline of -0.07% for December and -3.18% YTD from gains Market Neutral strategies offset by declines in Fundamental Growth & Value strategies. The HFRX Market Neutral Index gained +1.19%, +0.08% YTD, from gains in mean reverting, factor-based strategies and fundamental managers. The HFRX Fundamental Growth Index declined -0.01%, -13.24% YTD, from declines concentrated in exposure to small-cap US, European, and Emerging Markets equities. The HFRX Fundamental Value Index declined -0.25% for the month, +2.23% YTD, from declines in exposure to large-cap US & European equities.
HFRX Event Driven Index posted a decline of -0.20% for the month, -7.27% YTD, with gains in Merger Arbitrage strategies offset by declines in Special Situations equity strategies. The HFRX Merger Arbitrage Index gained +0.80%, -0.32% YTD, as activity in global M&A deals continued through December. The HFRX Special Situations Index declined -0.27%, -7.67% YTD, from declines in exposure to global catalyst-driven, fundamental value equities. 
Comments reference performance figures as of December 30, 2022