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In December, global financial markets surged to conclude a strong 2023 as investors positioned for falling inflation and interest rates in 2024. Technology, small caps, and Financials led global equity markets gains, while the UK, Australia, and India led regional gains. Interest rates fell sharply in December in response to a surprise drop in inflation, while the US Dollar declined against most currencies. Commodities saw mixed performance in December, with Sugar, Natural Gas, and Oil leading commodity declines while Wheat, Aluminum, and Platinum produced gains.
Hedge funds gained in the month of December with the HFRX Global Hedge Fund Index posting a gain of +1.39%, and +3.10% for the year.
HFRX Relative Value Index posted a gain of +2.13% for December and +4.77% YTD from gains in both Convertible Arbitrage strategies and Multi-Strategy managers. The HFRX Convertible Arbitrage Index gained +3.84% for the month, +10.11% YTD, as volatility fell through December. The HFRX RV: Multi-Strategy Index gained +1.97%, +4.27% YTD, as interest rates fell sharply in December.
HFRX Equity Hedge Index gained +1.60% for the month and +6.90% YTD from gains in Fundamental Growth, Value, and Market Neutral strategies. The HFRX Fundamental Growth Index gained +2.67% for December, +8.46% YTD, from gains concentrated in small-cap US & European equities. The HFRX Fundamental Value Index gained +1.13%, 6.36% YTD, from gains in exposure to large-cap US & European equities. The HFRX Market Neutral Index gained +0.56%, +4.16% YTD, from gains in mean reverting, factor-based strategies.
HFRX Event Driven Index posted a gain of +1.16% for December and +0.48% YTD from gains in Merger Arbitrage strategies and Special Situations equity strategies. The HFRX Merger Arbitrage Index gained +2.09% for the month, +2.95% YTD, as M&A deals continued through December and global equities saw gains across geographies and sectors. The HFRX Special Situations Index gained +1.10%, +0.31% YTD, from gains in exposure to global catalyst-driven, fundamental value equities.
The HFRX Macro Index gained +0.20% for the month and declined -1.49% YTD led by declines in systematic trend-following managers. The HFRX Macro Systematic/CTA Index declined -0.69% in December and -3.57% YTD as the US Dollar fell against most currencies. Commodities saw mixed performance in December, with Sugar leading Agricultural declines, Natural Gas leading Energy declines, and Silver leading Metals declines.
 
Comments reference performance figures as of December 29, 2023