Sat, Apr 29, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Morningstar 1000 Hedge Fund Index rose +2.7% in July, funds saw outflows of $1.6bn in first half of year (through June)

Monday, August 23, 2010

Nadia Papagiannis
Opalesque Industry Update - Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported preliminary hedge fund performance for July 2010 and asset flows through June. Hedge funds returned to the black in July. The Morningstar 1000 Hedge Fund Index rose 2.7%, while the currency-hedged Morningstar MSCI Composite Hedge Fund Index climbed 0.9%. Year to date through July, these indexes were up 0.4% and 1.7%, respectively.

Global stock markets bounced back in July, especially in Europe, as concerns over the debt crisis eased. European-equity-focused hedge funds missed out on much of the market rally, however. The Morningstar Europe Hedge Fund Index increased 5.6%, while the MSCI Europe NR Stock Index rose 11.6%.

"Confidence returned to the markets in July," said Nadia Papagiannis, alternative investments strategist for Morningstar. "But hedge funds are aware that the positive sentiment may be fleeting, and are thus prepared for another downdraft."

A rebound in the stock markets and investor sentiment, especially in Europe, also helped corporate event-driven hedge funds, which trade stocks of companies involved in mergers and tender offers, to post significant gains. The Morningstar Corporate Actions Hedge Fund Index rose 3.2% in July and is up 7.3% for the year to date. Deal volume improved in July in Europe and Asia but is still down year over year in developed markets.

The credit markets recovered in July. Positive corporate earnings surprises, stress tests of European banks, and a falling default rate led to a narrowing of credit spreads, especially in high-yield debt. Tightening spreads spelled profits for long-biased debt and fixed-income arbitrage hedge funds. The Morningstar Debt Arbitrage Hedge Fund Index rose 3.1% in July. Convertible bonds also benefited in July, and the Morningstar Convertible Arbitrage Hedge Fund Index increased 3.5% for the month.

While many hedge fund strategies returned to profits in July, hedge funds that take macro-economic bets using derivatives continued to suffer. The Morningstar Global Trend and Global Non Trend Hedge Fund Indexes gained only 0.6% and 0.7%, respectively, in July. Theses indexes finished the year though July 31 down 2.4% and 1.0%, respectively. Trend-following hedge funds profited from rallies in wheat and the decline in the U.S. dollar in July, but reversals in the stock index and Treasury bond market caused losses.

Although multi-strategy hedge funds and hedge funds of funds saw positive outcomes in July, the Morningstar Hedge Fund of Funds Index remains in the red for the year to date through July 31. Through June 30, multi-strategy funds in Morningstar's database experienced net outflows of $2.8 billion, the largest of any category. Funds in Morningstar's Global Non Trend and Corporate Actions hedge fund category saw the largest net inflows in the first six month of the year of $2.6 billion and $2.3 billion, respectively. Overall, funds in Morningstar’s hedge fund database saw outflows of $1.6 billion through June 30.

Source

kb

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Ex-Man manager combines sustainable investing with AI/ML[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Dr. Richard Bateson, quant fund manager and physicist, has recently

  2. Other Voices: "Winner-take-all" dynamics and hedge fund investing[more]

    A growing stream of thinking in microeconomics is the concept of "winner-take-all" dynamics. The idea seems simple. A combination of networking economics and classic economies of scale creates situations where there are just a few dominant firms or economic agents who are able to capture significant

  3. Investing - How Chipotle's comeback attracted big data robots and value investors alike[more]

    From Forbes.com: When William Ackman's ailing hedge fund Pershing Square Capital Management bet $1 billion on shares in Chipotle Mexican Grill beginning in July 2016, the stakes couldn't have been higher. Pershing Square was reeling from what would eventually be a near $4 billion loss in drugmaker V

  4. Gondor Capital sees challenges ahead for financial markets as two hedge funds post strong gains in Q1[more]

    Komfie Manalo, Opalesque Asia: Vincent Au, portfolio manager of New York-based hedge fund firm Gondor Capital Management believes that the remaining of the year would be challenging for the financial markets even as his two hedge funds maintain

  5. Service Providers - Colemore launches fee tracking service for limited partners[more]

    Following Colmore's successful launch in January 2017, the firm has announced the launch of FAIR.. FAIR is designed to help private equity investors independently validate fees and incentives charged by underlying managers, saving time and providing an extra level of comfort. There is a glob