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State of the Industry: April 2017

Matt Giordano Senior Associate, Client Analytics

In the latest iteration of Novus State of the Industry, we examine factor movements of April 2017, including best performing stocks & funds

For an interactive version of this article, please view it here.

April was another up month for US Equities, with the S&P 500 rising an additional 1%. The Novus HFU outperformed, up 1.34% for the month and 7.83% on the year (a +0.70% delta to the index YTD), thus establishing a new trend for the industry with two consecutive months of YTD alpha generation.

The outperformance for April is heavily driven by the telecom sector.  While telecoms lagged the overall market returning -3.14% as a sector for the month (along with energy, returning -3.63%), the hedge fund industry has performed well with a 2.14% return.  This is an overall alpha return of 5.28% in the sector.  Switching from monthly leader to monthly laggard, the materials sector has underperformed the index by 1.08% (1.17 for the S&P, 0.11% for the industry).

novus monthly industry report

April Sector ROIC for the HFU

Looking at Novus factor index performance, the Conviction index continues to lead the way returning 14.3% YTD (2.85% in April), followed by Crowdedness at 12.8% YTD (3.64% in April). Each factor index continues to lead the overall industry (and the US equity market) by a decent margin, except for the Concentration index, which is down 1.4% for the year after another negative month in April.

novus monthly industry report

Turning to individual managers, there was 100% turnover in our simulated top 5 this month.  Replacing Casdin at the top is QVT Financial, with a simulated return of 24.74% YTD. This month, both QVT and Pelham reported market values upwards of $1 billion, reversing the trend we saw in March of all 5 managers reporting under $1 billion.

When looking at top alpha securities, there was 80% turnover, with only Facebook remaining in the top 5 (and staying in the 4th position).  Solid earnings propelled GOOGL to the top of our alpha list, and above a $900 share price. Elsewhere in the top 5, CHTR replaces CMCSA, and AAPL fell out of the top 5.

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