Opalesque Industry Update - The Scotia Capital Canadian Hedge Fund Performance Index finished November 2011 up 0.27% on an asset weighted basis and
down 0.50% on an equal weighted basis. The Index outperformed broader equities and global hedge fund peers on both asset and
equal weighted bases.|
November was characterized by more extreme intra-month volatility, as broader equity markets gave back most of October’s gains throughout the month, then reversed dramatically during the last three days. Key drivers impacting markets were investor concerns over worsening European debt issues, a potential default by Greece as its prime minister called a surprise referendum that was subsequently called off, and more fears of contagion, particularly in Italy where bond yields surged. Better than expected retail sales over the US Thanksgiving holiday contributed to the US equity markets’ rally at month end, with the S&P 500 containing monthly losses at -0.51%. Canadian equities followed a similar trajectory, with performance led by the Health Care, Materials and Telecom sectors, and closed out the month at -0.39%. The USD strengthened against most major currencies in November, but weakened slightly against the JPY. Commodities slowed in aggregate on the back of a stronger USD. Expectations for slower economic growth additionally contributed to a decline for base metals. WTI Crude, on the other hand, advanced 7.69% on concerns over supply given unrest in oil-producer Iran.
Canadian hedge funds posted flat results in aggregate in November. The range in performance dispersion was not as wide as in the previous few months. Most managers did not benefit from the strong upswing in risk assets at the end of the month due to generally defensive positioning and lower risk levels. Uncertainty and volatility remain key leitmotifs in the current environment. Full performance table: Source