Fri, Aug 26, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Morningstar hedge fund performance shows Morningstar 1000 dropped 1.2% in January 2010, Morningstar tracked hedge funds lost $57bn in 2009

Tuesday, March 02, 2010
Opalesque Industry Updates - Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported preliminary hedge fund performance for January and asset flows through 2009. January was not a strong month for hedge funds. The Morningstar 1000 Hedge Fund Index dropped 1.2%, while the currency-hedged Morningstar MSCI Hedge Fund Index fell a slight 0.3%. The U.S. dollar appreciated against several currencies, particularly the Euro, in reaction to fiscal difficulties in countries such as Greece, which hurt the Euro-denominated hedge funds in Morningstar's indexes.

Equity markets tumbled in January, particularly in Europe, but also in the United States, as the federal government threatened to regulate banks more strictly. Emerging markets also fell as China tightened monetary policy. Overall, hedge funds were able to protect against much of this decline: the Morningstar US Equity Hedge Fund Index dropped just 1.4%, less than half that of the S&P 500; the Morningstar Europe Equity Hedge Fund Index also fell 1.4%, while the MSCI Europe dropped 5.9% in January; and the Morningstar Emerging Market Equity Hedge Fund Index dropped only 1.9%, while MSCI's Emerging Market stock index declined 5.6%. Global corporate deal activity, such as mergers and acquisitions, declined in January alongside equity markets, but increased outside of the United States and Europe, driving a 1.4% rise in Morningstar's Corporate Actions Hedge Fund Index.

"Hedge funds demonstrated their ability to soften blows dealt by the markets in January, despite exhibiting generally high correlations," said Nadia Papagiannis, Morningstar alternative investments strategist.

As equities dropped, U.S. government and corporate bonds rallied. The Morningstar Global Debt and the Morningstar MSCI Specialist Credit Hedge Fund Indexes rose 0.7% and 1.7%, respectively. Convertible bonds generally did not share in the bond market's upside. The Morningstar Convertible Arbitrage Hedge Fund Index, whose funds take long positions in convertible bonds, dropped 0.3%. January proved to be a strong month for distressed debt, as restructurings and revaluations in certain cyclical industries boosted returns. The Morningstar Distressed Securities Hedge Fund Index rose 1.7%.

Derivative trading strategies, which funds in the Morningstar Global Trend, Morningstar Global Non-Trend, and Morningstar MSCI Directional Trading Hedge Fund Indexes practice, showed declines of 4.1%, 1.0%, and 1.9%, respectively, although returns of the funds within the indexes varied widely. Those funds that follow longer-term trends in equity market indexes lost out due to a mid-month selloff. Some global macro hedge funds took advantage of global currency and government bond movements, although high volatility made trading difficult.

Overall, investors pulled approximately $57 billion from hedge funds in Morningstar's database in 2009, although inflows have been apparent since June 2009. In December 2009, hedge funds in the database lost about $2 billion in aggregate, due to significant redemptions in one large multi-strategy hedge fund. Hedge funds in Morningstar's Global Equity category saw the largest inflows in December, more than $0.2 billion.

Source

kb

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Algorithms platform aims to target typical challenges found in quantitative hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva: Last month, Quantopian received investments from Point72 Ventures, the new venture capital arm of Steven Cohen’s Point72 Asset Management.

  2. LatAm hedge funds surge in 1H to +24.4%, emerging markets assets rise[more]

    Komfie Manalo, Opalesque Asia: Hedge funds investing in Latin America posted strong gains through mid-2016, reversing declines in four of the past five years, including the last three years, to lead all areas of hedge fund performance through the first half of 2016, according to the latest HFR Em

  3. Asia - LGT Capital Partners: Alternatives set for continued rise in Asia[more]

    From Asianinvestor.net: More flows are likely into insurance-linked strategies, private equity and trend-following strategies/CTAs, given the benefits of such investments, argues LGT Capital Partners. Despite the numerous quantitative easing programs and bailouts of recent years, the quest for

  4. Opalesque Roundtable: Low and high fee investments often better than mid fee hedge funds[more]

    Komfie Manalo, Opalesque Asia: Hedge funds that charge the low and high fees stuff often provide better returns than "those sort of mid-fee investments", said Keith Haydon, chief investment officer of Man FRM. (Alternative) investment managers who charge high fees would often provide the most int

  5. Hedge fund investors pull $5.7 billion in July[more]

    From Bloomberg.com: Hedge funds suffered a third consecutive month of outflows in July as investors withdrew $5.7 billion, according to industry tracker Eurekahedge. Redemptions totaled $20.7 billion in the three months through July, with money managers betting on equities suffering $18.4 bill