Wed, Dec 7, 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. M&A - AllianzGI to acquire Sound Harbor Partners, SS&C completes acquisition of Wells Fargo's Global Fund Services business[more]

    AllianzGI to acquire Sound Harbor Partners Allianz Global Investors (AllianzGI), an active investment manager, announced that Sound Harbor Partners, a US private credit manager led by Michael Zupon and Dean Criares, have agreed to join its fast-growing Private Debt Platform. Under the te

  2. People - Nectar Financial hires senior investment team, Texas A&M replaces retiring foundation investment chief, Ex-Cadwalader partner Woolery makes another sudden exit, How to become a Python coder at a top hedge fund, by the co-CTO of Man AHL[more]

    Nectar Financial hires senior investment team Nectar Financial AG, a Swiss financial technology company for wealth and asset management, has announced that it has hired two key senior leaders to spearhead its digital asset management efforts. The company also announced that it has entere

  3. Activist News - Cognizant has introductory discussion with activist investor Elliott; to review letter, Starboard Value makes huge investment in Hewlett Packard, Hedge fund calls for removal of First NBC Bank CEO[more]

    Cognizant has introductory discussion with activist investor Elliott; to review letter From Indiatimes.com: Cognizant said it had an introductory discussion with Elliott Management after receiving the activist hedge fund's letter asking for a board shakeup, a buyback, a dividend and chan

  4. Opalesque Exclusive: Ireland relaxes treatment of direct lending funds[more]

    Bailey McCann, Opalesque New York: The Irish Central Bank has relaxed its treatment of direct lending funds, according to a recently released

  5. Institutions - Texas County & District culls 5 hedge funds, reallocates to existing managers, Kentucky board gives final approval to halve hedge fund portfolio, $38bn Finnish fund moves assets to U.S. as Europe flounders, South Korea’s National Pension Fund holds 5% stake in 62 listed companies[more]

    Texas County & District culls 5 hedge funds, reallocates to existing managers Texas County & District Retirement System, Austin, continues to reduce the number of hedge funds, but not the size of its $6.2 billion hedge fund portfolio. It will redeem a total of $760 million from five hedg