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NEW YORK — Hedge funds last year posted their worst performance since 2018, mainly dragged down by equities as portfolio managers struggled to place their bets amid market turmoil, industry data provider HFR said on Monday.

Overall, hedge funds fell 4.25% last year, according to the HFRI 500 Fund Weighted Composite Index, which tracks many of the biggest global hedge fund performances.

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Equity hedge funds notched the worst performance in 2022 among the four main hedge funds categories tracked by HFR. Still, their 10.37% loss still managed to beat the S&P 500 , which fell 19.4% in its worst year since 2008.

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Event-driven hedge funds, including those that bet on company mergers or restructurings, and relative value funds, which trade on asset price dislocations, also ended the year with losses of 5.04% and 0.9%, respectively.

Crypto hedge funds tanked 55.08%, after posting positive returns in only three months of the year. Despite their massive losses, crypto hedge funds account for a tiny part of the industry’s $3.8 trillion in assets.

While equity and crypto portfolio managers faced challenges last year, hedge fund investors found bright spots to get return. Macro hedge funds outperformed the industry, HFR showed. The HFRI Macro Index rose 9.31%, mainly driven by commodities, quantitative and trend following strategies, the data provider said.

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“Investors need to look under the surface to understand the industry performance last year. Long-short hedge funds are the biggest asset-weighted part of the industry,” said Patrick Ghali, managing partner of hedge fund advisory firm Sussex Partners. “Overall, I believe it was a good year for hedge funds.”

Macro hedge funds trade globally a broad range of assets, such as bonds, currencies, rates, stocks and commodities. This allowed them to smartly place their bets amid asset price dispersion caused by rising interest rates and surging inflation.

Reuters reported earlier this year that investors consider macro hedge funds are likely to outperform the industry again this year, as a volatile environment for markets persists.

Last year’s turmoil also proved to be good for multi-strategy hedge funds, which are allowed to trade across different assets and markets. Kenneth Griffin’s Citadel posted gains of 38.1% in its flagship fund Wellington, while D.E Shaw’s Composite Fund went up 24.7% and Millennium rose 12.4%.

(Reporting by Carolina Mandl, in New York Editing by Chris Reese and Lincoln Feast.)