Industry Updates

Composite Eurekahedge Hedge Fund Index up 1.1% (est.), 13.1% YTD, hedge funds attract $4.5bn in August

Tuesday, September 08, 2009

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Opalesque Industry Updates -Early reporting funds suggest another month of consistent returns for hedge funds, with the composite Eurekahedge Hedge Fund Index up 1.1% in August and 13.1% YTD. Managers achieved positive returns from most asset classes during the month – equities globally (China being a notable exception) ended the month positive; the MSCI AC World Index rose 3.4%. In the fixed income space, government bonds moved upwards despite persistent strength in risk appetites, while the commodity markets also afforded managers with profitable opportunities during the month.

- August marks the 6th consecutive month of positive returns for hedge funds (up 13.1% YTD); hedge funds up 2.6% for the last 12 months, while the MSCI AC World Index is down 18.5% for the same period.

- Net inflows of US$4.5 billions in August, with over 50% of the reporting funds attracting capital during the month.

- Over 300 new launches and 400 fund closures confirmed by Eurekahedge so far this year.

Regional Indices
Most geographical investment mandates recorded gains averaging close to or over 2% during August, with European managers (2.6%) delivering the best gains, on average. Managers in the region benefited partly from upward movement in regional equities (MSCI Europe Index rose 6% in August, with developed markets outperforming emerging market indices), and from bets in favour of government bonds. North American and Latin American funds ended the month with gains averaging 1.8% and 2.1%.

Asian managers, on the other hand, underperformed most others, with Japan-specific funds up 0.7% and their Asia ex-Japan-investing counterparts down 1.1%. The losses across Asia ex-Japan were mainly an outcome of the marked underperformance of regional equity markets; equities in China, Hong Kong and Taiwan lost 21.8%, 4.1% and 3.6% respectively. Significant losses from allocations to the region also go some way in explaining the underperformance of broader emerging market-investing funds, which ended the month flat to positive.

Strategy Indices
While all strategic investment mandates recorded positive returns, on average, CTAs and macro managers (up 0.5% and 0.6% respectively) continued to underperform those employing other strategies. This was mainly owing to choppy movement in the FX space, which negatively impacted managers allocating to the asset class. Furthermore, a huge downturn in natural gas prices (down nearly 20%) went some way in eroding gains during the month.

Most of the other strategies were up between 1% and 2% through August. Distressed debt managers, however, were a marked exception, recording returns averaging an impressive 6.2%. This was largely owing to the outstanding performance of a few emerging market-focused managers of the strategy, which positively skewed the strategy’s index.

Performance tables: Source.

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