Opalesque Industry Update -
Hedge Funds posted gains in July as equities recovered from the two month slide and risk tolerance returned to financial markets; currencies continued to be a focal point for investors as the Euro experienced a significant recovery against the US dollar. Investors were reassured by a number of developments including public equity and debt issuance, bank earnings and stress tests results, passage of a framework for US financial reform and the moderation of Euro-centric sovereign debt concerns. The HFRX Global Hedge Fund Index gained +1.23% for July, reversing 2 consecutive months of declines and bringing the index to a gain of 0.02% for 2010. |
Equity Hedge strategies had the largest contribution to July performance, with the HFRX Equity Hedge Index gaining +2.28%. Within these, Fundamental Growth funds gained +4.29%; Fundamental Value posted a smaller gain of +1.74. Equity Market Neutral posted a narrow gain of +0.12% for July; however, EMN has been the strongest area of Equity Hedge YTD 2010, with a gain of +2.05%.
Macro fund partially offset equity-driven gains, with the HFRX Macro Index posting a decline of -0.63% for July. Reversing the trend of positive contributions from Systematic Macro strategies, these declined -4.05% in July, surrendering most of the YTD gain to end the month +0.30% YTD. Short exposure in equities and commodities offset gains in fixed income and currency positions for the month. Fundamental Discretionary Macro exposure had only a partially offsetting positive contribution to the loss in Macro.
The HFRX Relative Value Index continued positive YTD performance with a gain of +1.54% in July, bringing YTD performance to +2.85%. Gains were distributed across credit sensitive Convertible Arbitrage and Multi-Strategy exposures, with these adding +1.58 and +1.76%, respectively.
The HFRX Event Driven Index posted a gain of +0.90%, reversing a YTD loss to bring index performance to +0.16%. On improved credit, risk tolerance and overall financial market liquidity, Distressed strategies had the strongest positive contribution, followed by Merger Arbitrage and Special Situations.
Comments reference performance figures as posted on August 3, 2010. Source