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In December, global financial markets posted a mixed performance to conclude 2024 as investors adjusted their positions in anticipation of policy shifts under the incoming Trump administration. Global equity markets experienced declines, with small-cap stocks and the energy sector leading declines, while the Nasdaq posted a modest gain for the month. Regional indices also showed varied performance, with France and India leading regional gains. Interest rates rose as investors reduced expectations for rate cuts in 2025, driven by ongoing inflationary pressures. The U.S. dollar strengthened against most major currencies. Meanwhile, commodities had mixed results, with gains in Oil & Natural Gas offset by declines in Platinum & Silver.

Hedge funds posted mixed performance for the month with the HFRX Absolute Return Index gaining +0.08% for the month and +4.86% YTD, while the HFRX Global Hedge Fund Index gained +0.01% in December and +5.27% YTD.

HFRX Event Driven Index gained +0.48% for the month and +3.74% YTD from gains in special situations managers and merger arbitrage strategies. The HFRX Special Situations Index gained +0.51% in December and +4.12% YTD from gains in exposure to global, catalyst-driven fundamental value equities. The HFRX Merger Arbitrage Index posted a slight gain of +0.01% MTD and -1.84% YTD as M&A deals continued through December 2024, and global equities posted declines for the month yet gained in 2024.

HFRX Macro/CTA Index gained +0.30% in December and +3.76% YTD from gains in systematic trend-following managers. The HFRX Macro Systematic/CTA Index gained +1.55% and +2.05% YTD as the U.S. dollar gained against most major currencies and commodities saw a mixed performance. Natural Gas, Oil, and Cocoa led commodity gains, while Platinum, Silver, and Sugar led declines.

HFRX Relative Value Index declined -0.25% for the month but gained +4.90% YTD from gains throughout the year in convertible arbitrage strategies and multi-strategy managers. The HFRX RV: Multi-Strategy Index declined -0.19%, +4.72% YTD, as interest rates rose in December. The HFRX Convertible Arbitrage Index declined -0.92%, +6.82% YTD, as volatility increased through December.

HFRX Equity Hedge Index declined -0.36% in December and gained +7.83% YTD from overall gains in market neutral, fundamental growth, and fundamental value strategies. The HFRX Market Neutral Index declined -0.03% in December, +7.21% YTD, from gains in mean reverting, factor-based strategies. The HFRX Fundamental Growth Index declined -0.30%, +9.32% YTD, from long-term gains in exposure to small-cap US and European equities. The HFRX Fundamental Value Index declined -0.42% in December, +7.08% YTD, from overall gains concentrated in large-cap US and European equities.

Comments reference performance figures as of December 31, 2024