What are the impacts of crises, such as the COVID-19 crisis, on the different types of Hedge Funds?

The objective of this study is to investigate the impacts of crises, in particular the Covid-19 crisis, on the different types of hedge funds. More specifically, I analyse the performances of 13 different types of hedge fund strategies on the period starting in January 2010 and ending on January 2022. I divided this period in two sub-periods, one period lasting 10 years before the pandemic, and the other lasting 2 years but including the beginning of the coronavirus crisis and the following waves until January 2022. The analysis is based on the Cahart four factor model, which allows to analyse whether hedge funds returns could or could not be explained by the four factors present in the model. These factors are the broad market returns, the size factor, the value factor, and finally the momentum factor. I also interviewed two professionals of the hedge funds industry who gave their perspectives and experiences on the topic as fund of hedge funds manager. The results of the study show that in the period before crisis, every strategy was highly correlated to the market returns. And for the period during crisis, almost every strategy was highly correlated to the market returns besides the CTA one. The results also show that none of the strategies managed to earn an alpha. Therefore, none of the hedge fund strategies beat the market during the covid crisis. This study has therefore shown that even though this crisis is not at all like any of the recent crises. The impacts that it had on the specific world of hedge funds are similar to the impacts that have been caused by recent crises like the global financial crisis.