Opalesque Industry Update - The Scotia Capital Canadian Hedge Fund Performance Index finished August 2010 up 3.71% on an asset weighted basis and up
2.09% on an equal weighted basis. The Index reached its highest level since inception in August, and significantly outperformed
broader equities and broader hedge fund indices this month on both an asset and equal weighted basis.|
Broader equities sold off in August after the July rally, as investors expressed risk aversion and concern over slower than expected economic recovery. In the US, the S&P 500 retreated -4.74%, as eight of ten sectors detracted from performance, led by financials, industrials and IT. Canada’s S&P/TSX posted gains of 1.71%, with seven of ten sectors contributing positively. Canadian materials stocks’ strong aggregate outperformance was primarily attributed to M&A activity – most notably BHP Billiton’s hostile bid for Potash Corp driving its price up 46%, as well as a flight to gold as investors sold off riskier assets. Gold’s strong 5.63% advance was insufficient to offset losses in other commodities. Oil’s stark sell-off by -8.90% was a primary driver in the monthly aggregate decline in commodities, fueled by investor concern over reduced expected demand from China. The USD depreciated further against major currencies, but gained versus the CAD.
Canadian hedge funds outperformed global peers in aggregate in August. Key performance success factors in the current uncertain environment remained: defensive portfolio positioning and nimbleness in navigating reversals. Managers have continued to maintain exposures below pre-crisis levels. Full performance chart: Source