Mon, Jul 28, 2014
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. Events – AIMA Australian Hedge Fund Forum, Sept. 16, Sydney[more]

    AIMA Australia invite you to join us at our annual Hedge Fund Forum on Tuesday 16th September 2014 at the Sofitel Sydney Wentworth. The AIMA Australian Hedge Fund Forum is a non-profit hedge fund conference organised by the industry for the industry, featuring quality Australian and internation

  2. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm

  3. Opalesque Exclusive: Loeb, Grantham cite growing economic concerns in letters[more]

    Bailey McCann, Opalesque New York: Hedge fund manager Daniel Loeb, head of Third Point, and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. have both released their quarterly investor letters today. While news is positive on some fronts, and both men see pockets of opportunity, they also h

  4. Investing – Hedge funds expect Netflix earnings to catapult forward, Third Point's Loeb takes stakes in Fibra Uno, YPF, Royal DSM, Lake Capital in talks to back Engine Group[more]

    Hedge funds expect Netflix earnings to catapult forward From Investing.com: Netflix has made major strides forward in 2014 despite ongoing battles with the FCC and cable companies over the issue of net neutrality. The FCC has now received over 500,000 comments from the public on its pend

  5. Hedge fund manager Winton Capital making headway with long-only strategy[more]

    From PIonline.com: North American investors are helping Winton Capital Management Ltd. make progress — albeit slowly — toward its founder's goal of becoming a $100 billion company. The firm's ticket to quadrupling its assets under management is unlikely to be one of its scientifically designed manag