Sun, Dec 21, 2014
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 5.2% (est.) in September (5.11% YTD), single-manager hedge funds saw $1.3bn in inflows in August

Friday, October 22, 2010
Opalesque Industry Update - Morningstar, Inc., a leading provider of independent investment research, today reported preliminary hedge fund performance for September 2010 and asset flows through August. September closed out a profitable quarter for hedge funds. The Morningstar 1000 Hedge Fund Index rose 5.2% in September and 7.6% over the third quarter, while the currency-hedged Morningstar MSCI Composite Index climbed 2.8% for the month and 4.3% for quarter.

"Hedge funds ended the third quarter with a bang," said Nadia Papagiannis, alternative investment strategist for Morningstar. "All strategies profited, as equities, bonds, commodities, and currencies rallied."

U.S. stocks, as measured by the S&P 500 Index, experienced their best September in 71 years, on the news of more potential easing by the Federal Reserve and better than expected economic data with payrolls and manufacturing. The Morningstar U.S. Equity Hedge Fund Index rose 6.0% in September against the S&P 500's 8.9% climb. European stocks, as measured by the MSCI Europe NR Index, increased 11.0%, as positive GDP and sentiment data outweighed credit concerns over Ireland and Portugal. The Morningstar Europe Equity Hedge Fund Index rose 7.8% during the month.

In mid September, the Federal Reserve's statements suggesting continued quantitative easing triggered a U.S. dollar freefall against several currencies and near-record lows in two- and five-year Treasury yields. This provided trading opportunities for funds in Morningstar's Debt Arbitrage and Global Non Trend Hedge Fund Indexes, which gained 3.6% and 4.0%, respectively in September, and 6.6% and 4.6% for the quarter. The U.S. dollar's plunge contributed to the rise in several commodities, including gold, silver, sugar, and cotton. Funds in Morningstar's Global Trend Hedge Fund Index, which profit from price trends in commodity futures and other derivatives, saw a 6.1% rise in September, their best month since early 2008.

Hedge fund of funds in the Morningstar's database also posted their best results since 2008. The Morningstar Hedge Fund of Funds Index outpaced the Morningstar Multi-Strategy Hedge fund index by almost a full percentage point in the third quarter of 2010, after having underperformed in the previous six quarters.

Merger and acquisition activity picked up in the third quarter of 2010, particularly in emerging markets and the energy sector. Funds in the Morningstar Corporate Action Hedge Fund Index, which engage in strategies such as merger arbitrage, rose 4.3%. Acquisition activity through leveraged buyouts helped to spur new corporate high-yield debt issuance, which almost broke 2009's year-long record this month. The appetite for high-yield bonds and risky assets in general boded well for funds in Morningstar's Distressed Securities Hedge Fund Index, which increased 2.6% in September. Volume in convertible bond issuance also improved in the third quarter, especially in Asia. The Morningstar Convertible Arbitrage Hedge Fund Index climbed 7.4% in the three months ending September 30.

In addition to a favorable market environment in September, hedge funds also appear to be back in favor with investors.

After two months of net outflows, single-manager hedge funds in Morningstar's database saw $1.3 billion in inflows in August. Convertible arbitrage hedge funds attracted the most assets in August, $773 million. For the year to date through August, hedge funds in the database have leaked $4.4 billion, although funds in the Global Non-trend, U.S. Equity, and Corporate Actions categories experienced inflows of $3.3 billion, $1.4 billion, and $1.2 billion, respectively.

September returns for the Morningstar Hedge Fund Indexes are based on funds that reported as of October 18, 2010. September returns for the Morningstar MSCI Hedge Fund Indexes and August asset flows are based on funds that reported as of October 13, 2010. Hedge fund investors, managers, consultants, and advisors can access additional information through the Morningstar(R) Alternative Investment Center(SM), formerly Morningstar(R) Altvest(SM), the company's research platform designed specifically for hedge funds, or Morningstar Direct(SM), the company's global research platform for institutions.

Morningstar has approximately 11,000 hedge funds and funds of hedge funds in its database. The Morningstar 1000 Hedge Fund Index, a global, broadly representative benchmark for hedge fund performance, has return history from January 2003. The index comprises the top 90% of eligible assets in Morningstar's hedge fund database. For the purposes of the index, Morningstar counts funds with shared portfolios as a single hedge fund; funds of hedge funds are excluded from consideration. The index is updated daily for the previous month-end, rebalanced monthly, and reconstituted semi-annually. In addition, Morningstar has 17 category indexes and four broad category indexes based on Morningstar's strategy-specific classification system for hedge funds. Morningstar's hedge fund indexes are not investable.

(press release)


Full performance table: Source


About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 360,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 21 countries... Corporate website: www.morningstar.com

-KM

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. Investing - Big hedge funds win again on PetSmart, Riverbed, RBS sells real estate loans to hedge fund Cerberus, Talisman energy speculation: Which hedge funds could benefit?[more]

    Big hedge funds win again on PetSmart, Riverbed From CNBC.com: Another week, another set of wins for activist investors. On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale a

  2. Outlook - Hedge fund manager who remembers 1998 rout says prepare for pain, Bond guru Bill Gross predicts U.S. economic growth to dip to 2%[more]

    Hedge fund manager who remembers 1998 rout says prepare for pain From Bloomberg.com: Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia. He was soon working around the clock when investors began targeting the region’s

  3. Investing - Hedge funds get boost from healthcare in 2014, Paulson & Co takes stake in Salix on heels of inventory issues[more]

    Hedge funds get boost from healthcare in 2014 From Valuewalk.com: The healthcare sector started the year on a turbulent note, as stocks of many major biotechnology companies were battered. However, most of the players in this sector have bounced back. The BarclayHedge Healthcare & Biotec

  4. Opalesque Exclusive: U.S. legal receivables fund launched in August[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Investing in asset-backed receivables is a strategy that has been an integral part of the alternative investment space within the overall fixed income asset c

  5. Comment - High fees and low performance hit hedge funds[more]

    From FT.com: Disenchantment over high fees and lackluster performance may finally be turning the tide against hedge funds, fresh data suggest. Despite generally weak returns since the global financial crisis, hedge funds have enjoyed positive net inflows every year since 2010. This helped assets und