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Barclay Hedge Fund Index down 0.29% (est.) in August (+1.69% YTD), equity short bias and arbitrage strategies profitable

Tuesday, September 14, 2010
Opalesque Industry Update – Hedge funds slid 0.29% in August according to the Barclay Hedge Fund Index compiled by BarclayHedge.

“Global equity markets beat a retreat in August as the ‘fear trade’ returned with a vigor after having been smothered by increased risk appetite in July,” says Sol Waksman, founder and president of BarclayHedge.

“The fear trade is a product of investor nervousness and typically gives rise to selling of equities and purchases of US Treasury bonds.”

The Barclay Equity Long Bias Index lost 2.03% in August, Equity Long/Short was down 0.76%, while the Equity Market Neutral Index nearly held its ground with a 0.10% loss.

Globally, the Pacific Rim Equities Index lost 1.29%, European Equities were down 0.50%, and Emerging Markets slid 0.08%.

On the positive side, the Barclay Equity Short Bias Index rebounded from a 3.21% loss in July with a 2.49% August gain.

Arbitrage strategies also performed well this month. Convertible Arbitrage was up 1.70%, Merger Arbitrage gained 1.22%, and the Fixed Income Arbitrage Index rose 1.11%.

“The fear trade helped to drive up bond prices in August, and interest-rate sensitive strategies were positively impacted,” says Waksman.

“Merger Arbitrage did well as HP launched a bidding war for 3Par, Intel purchased McAfee, and BHP pursued a hostile bid for PotashCorp.”

The Barclay Fund of Funds Index lost 0.02% in August, and is down 0.81% for the year.

(press release)

Full performance table: Source

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