Hedge funds perform better with Democrats in White House, HFR data shows
2024.11.05 11:14
By Nell Mackenzie
LONDON (Reuters) – Hedge fund performance, on average, is better when the U.S. president is a Democrat, data from research firm HFR showed on Tuesday, as U.S. voters headed to the polls.
Under Democratic Party presidents, hedge funds averaged a 10.2% annualized return, whereas under a Republican president hedge funds returned 8.7% on average, showed the data from Hedge Fund Research’s main index which tracks the returns of global hedge funds.
This data from HFR’s HFRI Fund Weighted Composite Index tracked hedge funds’ performance averaged over presidential terms from 1990 to 2024.
Hedge funds performed roughly twice as well when the House and Senate majority were in one party than they did with a split legislative body, the HFR data showed.
Performance when Democrats had a majority in the U.S. Congress came in higher than with Republicans, the data also showed.
By strategy, stock hedge funds fared the best under Democrats — averaging a 12.7% return compared to 9.6% under the Republicans, over the last 34 years, said HFR data.
Hedge funds trading M&A deals and the relative value between different financial assets also had higher returns during years when the president was a Democrat, the data showed.
Funds speculating on macroeconomics or so-called macro hedge funds were the only strategy listed with higher returns during Republican presidents, according to HFR.
The dispersion between hedge fund performance, or the difference between the best and worst performing funds differed the most during years when the president was a Democrat, it added.
Hedge funds’ annualized performance averaged the highest during the first year of a president’s term and came in lowest during two term presidencies in the second, sixth and last year.
With 2008 and the financial crisis removed, the result skewed marginally towards Republicans. Hedge funds returned 10.7% with Republicans during these years, compared to a 10.2% result with presidents from the Democratic Party, HFR said.
(This story has been refiled to fix a typo in ‘tracked,’ in paragraph 3)
