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Hedge fund performance may be determined by European outcome

Monday, July 16, 2012
Opalesque Industry Update: Hedge funds gained 0.66% in June, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index is up 2.39% year to date.

“A bailout package for Spain announced early in the month helped to set a more positive tone for equity markets in June,” says Sol Waksman, founder and president of BarclayHedge.

“The ECB’s month-end agreement to make loans directly to eurozone banks added fuel to the rally and propelled the S&P 500 to its largest single day gain this year, demonstrating yet again that Europe’s financial woes continue to be a major determinant of hedge fund and equity market performance.”

The Barclay Hedge Fund Index has gained ground in four of the first six months of 2012, mirroring the largely positive performance of equity markets.

“Each time that sentiment regarding Europe turns more negative, hedge funds have a down month as investors move into risk-off mode and sell equities,” says Waksman.

Overall, 13 of Barclay’s 18 hedge fund indices had positive returns in June. The Healthcare & Biotechnology Index gained 2.57%, Equity Long Bias was up 1.63%, Merger Arbitrage gained 0.69%, the Convertible Arbitrage Index rose 0.66%, and Pacific Rim Equities added 0.62%.

On the losing side, the Barclay Equity Short Bias Index dropped 1.95% in June, following a 9.03% gain in May. The Technology Index was down 0.52% in June.

After two quarters in 2012, Healthcare & Biotechnology leads all hedge fund strategies with an 8.86% cumulative gain. Convertible Arbitrage is up 5.06%, Equity Long Bias has gained 4.39%, and Fixed Income Arbitrage is up 4.39%.

The Equity Short Bias Index is the only losing hedge fund strategy in 2012, and is down 9.80% year to date.

The Barclay Fund of Funds Index lost 0.49% in June, but remains up 0.94% in 2012.


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