Opalesque Industry Update - The Scotia Capital Canadian Hedge Fund Performance Index finished July 2010 down 2.20% on an asset weighted basis and
down 0.33% on an equal weighted basis. The Index underperformed broader equities and broader hedge fund indices in July on
both an asset- and equal weighted basis. |
Global equities rebounded strongly in July, reversing some of the steep decline through May and June. Better than expected results from stress tests conducted on European banks lifted investor concern over the near-term possibility of “double-dip” recession. In the US, the S&P 500 rallied 6.88%, driven primarily by Q2 corporate earnings that exceeded analyst expectations as all sectors advanced on the month.
Broad based gains also drove a monthly advance of 3.71% in Canada’s S&P/TSX. Canadian materials stocks were the only underperforming sector, due mainly to a decline in the price of gold as investors returned to riskier assets. Continued growth in developing countries such as China, India, and Brazil increased aggregate demand for other commodities, such as crude oil, which was up 4.39%. Against the backdrop of the rally in commodities, the USD depreciated against most major currencies, including the CAD, with which it hovered close to par throughout the month.
Canadian hedge funds once again showed wide dispersion within strategy sectors in their July results. Portfolio positioning remained a key perfordriver, as well as the ability to navigate the sharp trend reversals in equities, gold and EUR-USD. Full performance chart: Source