Industry Updates

Barclay Hedge Fund Index Gains +2.15% for July (est), +2.2% YTD

Wednesday, August 11, 2010

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Opalesque Industry Update - Hedge funds gained 2.15% in July according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index is up 2.2% year-to-date.

All but one of Barclay’s 18 hedge fund indexes had a positive return in July. The Barclay Emerging Markets Index surged 3.54%, Equity Long Bias jumped 3.03%, the Technology Index gained 2.61%, Multi-Strategy was up 2.26%, and Fixed Income Arbitrage rose 2.03%.

“All of the winds were blowing in the right direction in July,” says Sol Waksman, founder and president of BarclayHedge. “Equity markets rallied on the back of strong earnings and bond prices rose as inflation fears subsided.”

“As of today, 80 percent of the hedge funds that have reported returns for July are showing a profit for the month.”

The Emerging Markets Index rebounded from losses of 5.48% in May and 0.22% in June, and is now up 2.73% in 2010.

“Based on the July returns to MSCI indices, emerging market equities in the Far East gained 5.86 percent, Latin America rose 11.85 percent, and Eastern Europe increased by 12.70 percent,” says Waksman.

“Although equity-based hedge funds had a good month in July, as a group they underperformed the equity indices. Since hedge funds have both long and short exposures in their portfolios, it’s not uncommon for them to underperform when equities rally strongly.”

“Let us not forget that the combination of long and short exposures is also a major factor contributing to hedge fund outperformance in down markets.”

The only losing strategy in July was the Equity Short Bias Index, which fell 2.89%. Equity Short Bias has been volatile in 2010, with three months of strong gains versus four months of equally severe losses. Each month has seen a loss or gain ranging between 2.40% and 5.85%.

The Barclay Fund of Funds Index gained 0.76% in July, but remains down 0.68% year-to-date. Click here to view five years of Barclay Hedge Fund Index data, or download 13 years of monthly data.

Performance Table available: Source

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