Opalesque Industry Update - Hedge funds as measured by the
Greenwich Global Hedge Fund Index (“GGHFI”) moved higher for their
fourth straight month in October to reach new highs for the year. All
major Greenwich hedge fund strategy groups advanced during the month as a
result of strong corporate earnings in equity markets and planned
quantitative easing from the Federal Reserve. The GGHFI gained 2.35%
compared to global equity returns in the S&P 500 Total Return (+3.80%),
MSCI World Equity (+3.65%), and FTSE 100 (+2.28%) equity indices. 86% of
constituent funds in the GGHFI ended the month with gains.|
“Hedge funds were fully on board the rally in October as market volatility temporarily faded into the background,” said Clint Binkley, Senior Vice President. “Strong corporate earnings and telegraphed quantitative easing provided a boost to both credit and equity markets during the month. Hedge funds now have achieved year-to-date returns comparable to benchmark equity indices with half the drawdown of earlier months.”
Long/Short Equity managers were among the best performing hedge funds in October as a result of strong moves in equity markets during the month. The Greenwich Global Long/Short Equity Index advanced 2.67%. Growth managers gained the most on average, rallying 2.79%, and slightly outperformed Value-based funds which gained 2.77%. Opportunistic strategies trailed slightly behind but still gained 2.45%. Short-Biased funds managed to hold their ground despite the broad market moves during the month, gaining 0.58%. Year-to-date, Long-Short Equity managers have performed in line with equity markets with a gain of 6.7%.
Directional Trading funds posted the best results of any strategy group in October, gaining 2.81% on average. Managed Futures funds continued their success from the past two months, gaining 3.56% as quantitative and discretionary models produced positive results. Macro funds also advanced but to a lesser extent, gaining 0.84%, with contributions coming from equity and fixed-income positions.
Market Neutral funds showed positive results across all major strategies in October as the Greenwich Global Market Neutral Index gained 1.55% on average. Event-Driven funds were the best performers, gaining 2.02%. Managers investing in Distressed Securities were the standouts, gaining 2.78%, compared to funds focused on Special Situations which added 2.26%. Merger Arbitrage funds lagged slightly but still gained 0.89%.
Arbitrage Strategies gained across all categories but Convertible Arbitrage funds were once again the best performers, gaining 2.45%. Year-to-date, they are the highest returning arbitrage funds, with a gain of more than 11%. Fixed Income Arbitrage and Other Arbitrage funds also gained 1.09% and 0.45%, respectively in October. Equity Market Neutral managers also experienced one of their best months this year, gaining 1.15% in what has been a lackluster year for this strategy.
Long/Short Credit managers moved higher for their fifth straight month in October, with the Greenwich Global Long/Short Credit Index gaining 0.71% - its fourth straight monthly gain. Bonds continued to hold their ground despite a rally in equities during the month, and hedge funds managers capitalized on trading opportunities. Multi-Strategy funds also posted their best results thus far this year, gaining 1.93%
On a regional level, hedge funds investing in emerging and developed markets posted similar results in the month of October with the respective Greenwich Regional Composite Indices moving higher by 2.31% and 2.33%. In developed markets specifically, funds investing exclusively in North America were the best performers, advancing 2.64%. Funds investing in developed regions in Europe gained 1.86%, slightly topping returns from developed Asian funds which gained 1.67%. Funds investing on a Global basis in developed markets gained 2.28%.
For emerging market hedge funds, Asia was the best performing region for the third month in a row, as funds focused on this area gained 2.74%. Emerging market Europe funds were the next best performers, adding 1.96% on average. South American and Latin American-based hedge funds trailed the group but still gained 0.70%. Year-to-date, the Greenwich Emerging Market Composite index still trails the Developed Market Index by more than 200 basis points.
The GGHFI is one of the oldest benchmarks of the hedge fund universe. Final Strategy and Regional index results for October will be available early December, once additional funds have submitted returns. Past performance and index construction rules for all Greenwich Hedge Fund Indices may be viewed at www.greenwichai.com.
About Greenwich Alternative Investments
Greenwich Alternative Investments, LLC (and its affiliates) manages one of
the world’s largest hedge fund databases and is among the oldest
providers of hedge fund indices, asset management services, and research to
institutional investors worldwide...Full performance table: Source