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Barclay Hedge Fund Index slips 0.20% (est.) in October (+19.76% YTD), loss ends 7-month winning streak

Tuesday, November 17, 2009
Opalesque Industry Updates – Hedge funds registered a 0.20% loss in October according to the Barclay Hedge Fund Index compiled by BarclayHedge.

“Prior to October’s loss, the Barclay Hedge Fund Index gained 21.96 percent during seven consecutive months of positive performance,” says Sol Waksman, founder and president of BarclayHedge.

“It was the best return for a string of winning months since the 18-month period from October 2002 through March 2004, when the Index gained 25.80 percent.”

Eleven of Barclay’s 18 hedge fund indices lost ground in October, while the seven other strategies gained nearly equal value.

Equity Long Bias fell 1.79%, European Equities lost 1.69%, Healthcare & Biotechnology was down 1.35%, the Equity Long/Short Index lost 1.21%, and Technology was down 1.17%.

On the positive side, the Barclay Equity Short Bias Index rebounded with a 4.34% gain, Fixed Income Arbitrage gained 2.20%, Distressed Securities rose 1.53%, Convertible Arbitrage was up 1.27%, and Emerging Markets gained 1.05%.

“Most equity markets in developed countries followed the US lead and lost ground in October,” says Waksman.

“Emerging markets did better as gains in China, Russia and Brazil set the trend.”

Increasing investor confidence in recent months fueled a broad rally in the fixed income sector. Since the beginning of the year, investment grade credit spreads have decreased by approximately 300 basis points. High yield spreads have decreased by more than 1000 points. “Hedge funds investing in fixed income will need to be more selective going forward,” says Waksman. “The easy money in this sector is probably off the table.”

The Barclay Fund of Funds Index lost 0.09% in October, but is still up 8.66% year to date.

Click here to view five years of Barclay Hedge Fund Index data, or download 11 years of monthly data.


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