Mon, Feb 8, 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. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  2. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time

  3. Investing - Hedge funds bet on risks in U.S. blue-chip debt, Hedge funds bets against bank credit risk paying off, Tiger Global still likes Internet names, gets pointers from Jeter[more]

    Hedge funds bet on risks in U.S. blue-chip debt From WSJ.com: Hedge funds are betting the next bond sector to crack will be the $4.5 trillion market for the safest U.S. corporate debt. New York’s Perry Capital has placed a $1 billion wager against investment-grade bonds issued by 10 comp

  4. Short Selling - Hedge fund manager Kyle Bass is shorting real estate—again, Top US hedge fund has €80m short position in Paddy Power Betfair[more]

    Hedge fund manager Kyle Bass is shorting real estate—again From Fortune.com: He also predicted the mortgage crisis in 2008. Hedge fund manager Kyle Bass, who runs Dallas-based Hayman Capital, tanked the stock of a little-known real estate financier Friday by revealing that he is shorting

  5. HFRU Hedge Fund Composite Index down -2.58% in January[more]

    Global financial markets posted sharp losses in January led by declines in Oil and global equities, though steep intra-month losses in both were narrowed by strong gains in final trading days of the month. Global equities posted steep declines for the month led by Biotechnology, Energy, Financial, E