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Eurekahedge finds smaller hedge funds lagged larger in April

Tuesday, May 08, 2012
Opalesque Industry Update - Hedge fund returns were flat to slightly negative in April as most regions and strategies witnessed marginal movements during the month. As managers provided downturn protection amid declining markets globally, the Eurekahedge Hedge Fund Index was down 0.07% and the MSCI World Index2 declined 1.62%.

Key highlights for April 2012:

  • The asset-weighted Mizuho-Eurekahedge Top 100 Index increased 0.28% in April 2012, confirming a better month for larger funds.
  • Relative value and fixed income hedge funds are a bright light in the industry - they have now witnessed five consecutive months of positive returns with gains of 5.91% and 4.56% respectively.
  • Launch activity has remained strong in 2012 with more than 150 funds launched worldwide as at the end of April 2012.
  • Assets in distressed debt hedge funds were back above US$60 billion.
  • The Eurekahedge Latin American Hedge Fund Index saw a surge of 6.45% at end-April 2012.
Regional Indices

Negative returns in April affected most regional hedge funds as market sentiment became more risk-averse leading to declines across global markets. After a short few months of strong growth, attention returned to European debt issues, soft US economic data and slowing Chinese growth. Although most regional hedge fund indices ended the month in the red, they delivered notable outperformance to their respective underlying market indices.

The Eurekahedge North American Hedge Fund Index finished the month dropping by 0.07%, beating the S&P 500 by 0.68%. Managers with positive returns banked on upbeat corporate earnings and the end of April saw a surge caused by speculation of further stimulus from the US Federal Reserve. European hedge funds provided significant outperformance during the month with declining only 0.23% while the MSCI Europe Index lost 2.91%.

Emerging market hedge funds were up 0.54% in the month, bucking the trend from other regions and underlying markets and the MSCI Emerging Markets Index was down 0.96% in April. Latin American hedge funds once again delivered substantial outperformance with gains of 1.09% while the Brazil IBovespa saw sharp losses of 4.17% while the Eurekahedge Latin American Hedge Fund Index shot up 6.45% by end-April 2012.

Strategy Indices

Most strategies were marginally positive in April with risk neutral and fixed income strategies posting the highest gains. The Eurekahedge Relative Value Hedge Fund Index increased 0.82% backed up by profits made from market neutral trades within the bond space and from special situations. Fixed income managers captured healthy returns of 0.43% as weak growth continued to weigh on many countries, sending more inflows into bond products. Australia and Brazil for example, displayed evidence of a weakening domestic economy leading central banks to soften monetary policy. Unemployment in Spain spiked to nearly 25% prompting S&P to downgrade the country's debt two notches to BBB+. Multi-strategy hedge funds also registered a net gain for the month of 0.39% as most managers kept diversified portfolios and adopted short term investment styles. CTAs on the other hand witnessed a flat month attributed from losses in long US dollar, commodity and equity positions.

Press release

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