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Hedge Funds, Novus Monthly Industry Report

State of the Industry: February 2017

Charles Russo Vice President, Client Analytics

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

For the interactive version of this report, please head to our Novus State of the Industry report.

February marked an ascent into uncharted territory. Both the Dow and S&P closed at all-time highs on the 27th. Unfortunately, this environment continues to be unfavorable for Hedge Funds as the Novus Hedge Fund Universe underperformed the S&P 500 by 116 bps (they returned 2.81% and 3.97% respectively). The spread of Growth outperformance is narrowing however, as the Russell 1000 Growth returned 4.2% and the Russell 1000 Value returned 3.6% (versus 3.4% and 0.7% respectively in January).

state of the industry february

Prominent consensus names such Apple Inc. (AAPL), Priceline Group Inc. (PCLN), and Allergan, Plc. (AGN) led the field in alpha generation above their respective sectors; and performance across the market was well diversified, with only Energy and Telco delivering negative returns, the latter of which providing the canvas for the Hedge Fund Universe as whole to generate its highest degree of alpha across all sectors.

It was yet another standout month for Healthcare specialists, however. Key trial completion for biopharma/tech names such as Assembly Biosciences Inc (ASMB), La Jolla Pharmaceutical Co (LJPC), and Loxo Oncology Inc (LOXO) yielded tremendous performance for Casdin, EcoR1, RTW, and Tang.

For a look back at the names that stood out in 2016, please be sure to read our report: The Best and Worst Hedge Fund Stocks of 2016.

The Hedge Fund Factor indices delivered another set of impressive returns, with all but the Concentration index handedly outpacing the Hedge Fund Universe. Holding Clovis Oncology (CLVS), the Concentration Index was subject to the opposite end of the pharma volatility plot.

state of the industry february

Healthcare continues to make its mark across the investing landscape, we’ve covered this (along with a variety of other sectors) in our post: Q4 2016 Hedge Fund Trends for Investment Managers.

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