Wed, Oct 18, 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 0.1% in August, only merger arb funds saw inflows

Thursday, September 23, 2010
Opalesque Industry Update - Morningstar, Inc., a provider of independent investment research, reported preliminary hedge fund performance for August 2010 and asset flows through July. Hedge funds held up in August, as the Morningstar 1000 Hedge Fund Index rose 0.1% and the currency-hedged Morningstar MSCI Composite Hedge Fund Index increased 0.6% against a decline in global equity markets, particularly in the United States. The Morningstar U.S. Equity Hedge Fund Index fell 2.4%, approximately half as much as the S&P 500. Hedge funds specializing in small-market-capitalization stocks hedged even more effectively. The Morningstar U.S. Small Cap Equity Hedge Fund Index dropped 1.5% versus the Russell 2000 Index's 7.4% dive this month.

"Riskier assets such as equities have moved in concert either up or down over the last several months, a trying environment for many hedge fund strategies," said Nadia Papagiannis, alternative investment strategist for Morningstar. "But hedge funds effectively preserved capital in August."

August was characterized by a general selloff in risky assets, not just equities, after the Federal Reserve confirmed weakness in the U.S. economy early in the month. Investors flocked toward the safety of U.S. Treasuries, driving down interest rates to historic lows and prices on bonds higher. Price-trend following managed futures funds capitalized on the upward trend in Treasury futures, which resulted in a 3.5% climb in the Morningstar Global Trend Hedge Fund Index in August. Trend-following strategies have suffered for most of 2010, but August's results pushed many of these funds into the black. Along with government bonds, precious metals benefited from investors' flight from risk, a profitable theme for several macro-economic oriented funds in Morningstar's Global Non-Trend Hedge Fund Index.

Fixed-income hedge fund strategies also profited from risk-aversion trades. The Morningstar Global Debt Hedge Fund Index grew 1.3% in August. Even though riskier credits underperformed in August, convertible arbitrage strategies were able to post gains, primarily due to high volatility. The Morningstar Convertible Arbitrage Hedge Fund Index increased 1.0%. And even though equity markets tanked in general, merger activity picked up steam. The Morningstar MSCI Merger Arbitrage Hedge Fund Index rose 1.0% in August.

For the year to date through July, funds in Morningstar's Corporate Actions Hedge Fund Index, which also engage in merger arbitrage, received large inflows of $2.3 billion. Global Non-Trend funds also experienced inflows, of $2.6 billion. Most other hedge fund categories suffered outflows in 2010, especially multi-strategy funds.

(press release)

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. Regulatory - David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge, Carried interest tax: How much does it matter?, Odey sees 'terrifying' mix in MiFID, tapering, asset values, Hedge funds come together to share cost of MiFID and research, SEC turns up the heat on U.S. investment advisers, India's Sebi asks hedge funds to report investments in commodity derivatives[more]

    David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge From CNBC.com: David Stockman is warning about the Trump administration's tax overhaul plan, Federal Reserve policy, saying they could play into a severe stock market sell-off. Stockman, the R

  2. North America - Puerto Rico rejects loan offers, accusing hedge funds of trying to profit off hurricanes[more]

    From TheIintercept.com: Puerto Rico has rejected a bondholder group's offer to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico's Fiscal Agency and Financial Advisory Authority said the offer was "not viable" and would harm the islan

  3. Investing - WPP targeted by short-selling American hedge fund, Sun co-founder sells secretive hedge fund on big chip trade[more]

    WPP targeted by short-selling American hedge fund From Cityam.com: An American hedge fund has mounted a bet against WPP, the world's largest advertising group, with a trade worth almost £90m. Lone Pine Capital has built a short position worth 0.51 per cent of the FTSE 100 company,

  4. Hedge funds up as industry adjusts to rising rates[more]

    Komfie Manalo, Opalesque Asia: Hedge funds have reshuffled their portfolio after nearly four weeks of rising rates as the Lyxor Hedge Fund Index was up +0.2% from 19 September to 26 (+1.1% YTD), fuelled by strong results of global macro funds, Lyxor Ass

  5. Manager Profile - How the world's hedge fund king used 'idea meritocracy' to become a billionaire[more]

    From Forbes.com: In 1982, Ray Dalio made what he calls the biggest mistake of his life. He made a bet that there would be an economic collapse stemming from a debt crisis. And he was wrong. He lost money. He lost his client's money. He had to let people go from his firm and borrow money from his dad