Thu, Apr 24, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

HFRI Fund Weighted Composite Index gained +1.4% in July (+4.73% YTD)

Wednesday, August 07, 2013
Opalesque Industry Update - Hedge funds posted gains across Equity Hedge, Event Driven & Relative Value Arbitrage strategies in July, as most strategies reversed losses from the prior month on strong earnings, acceleration of M&A activity, moderating concerns of a sharp rise in interest rates and receding macro risks. The HFRI Fund Weighted Composite gained +1.4 percent for the month, the highest monthly performance since January, according to data released today by HFR, the established leader in the indexation, analysis, and research of the global hedge fund industry.

The HFRI Equity Hedge Index led strategy performance in July with a gain of +2.5 percent; Equity Hedge gains were broad based across sub-strategies, sparked by strong earnings reports by Starbucks, Facebook and US Financials and led by HFRI Technology/Healthcare, Energy/Basic Materials and Fundamental Value strategies. The HFRI Equity Hedge: Technology/Healthcare Index gained +4.0 percent in July, the best monthly performance since September 2010, while the HFRI EH: Energy/Basic Materials posted a gain of +3.7 percent, the best monthly performance for energy focused funds in 18 months. Fundamental Value strategies added +3.3 percent in July, with contributions from US, European and Asian exposures, as well as from US Consumer, Financial and Energy sectors. With the July performance, Equity Hedge surpassed YTD performance of Event Driven, leading all main strategy indices with a +7.7 percent gain.

Event Driven strategies also gained in July, with the HFRI Event Driven Index up +1.5 percent, reversing the -1.1 percent decline of the prior month. Event Driven performance was led by Activist and Special Situations exposures, with these adding +3.8 and +1.8 percent, respectively, in the month. Positioning across Sony, Dell, Apple, Yahoo and Herbalife, as well as M&A positions in Elan, Air Products and Publicis/Omnicom all contributed to performance gains. HFRI Distressed Index gained +1.4 percent while the HFRI Merger Arbitrage Index advanced +1.0 percent. Fixed Income-based Relative Value strategies were also positive in July, as high yield credit tightened and concerns about sharp rise in interest rates associated with a near term extraction of stimulus measures by the US Federal Reserve subsided. The HFRI Relative Value Index gained +0.4 percent for the month, led by Volatility and Asset Backed strategies, which increased by +1.2 and +0.8 percent, respectively.

Macro hedge funds posted their third consecutive monthly decline, with the HFRI Macro Index down -0.1 percent. The HFRI Macro: Systematic Diversified/CTA Index declined -1.1 percent for the month, with weakness from sharp reversals in Commodity and Currency strategies. Discretionary Macro exposure in Energy & Commodity, as well as Active Trading strategies, had positive contributions, partially offsetting CTA losses.

The HFRI Fund of Hedge Funds Index also posted a gain of +1.3 percent. Despite recent capital outflows, the FOF Index has posted a YTD performance of +4.78 percent, in line with the YTD gain of +4.73 percent of the Fund Weighted Composite Index.

“In sharp contrast to the volatile, risk-off sentiment of the prior month, hedge fund performance in July was driven by a positive tone to earnings season and a dynamic environment for M&A including strategic transactions, shareholder activist and special situations exposures, contributing to a favorable operating environment for long/short strategies,” stated Kenneth J. Heinz, President of HFR. “While many managers continue to position for a gradual extraction of stimulus measures by the US Federal Reserve and correspondingly rising bond yields, fundamentally driven, valuation-oriented strategies produced strong results in July as risk-off sentiment moderated from the prior month and investor risk tolerance continued to normalize. While the risks associated with Fed tapering remain salient, managers are well positioned at present for the opportunities in EH and ED strategies, maintaining short portfolio duration, cautious high yield exposure and mixed exposure to commodities in order to remain flexible, tactical and opportunistic in 2H13.”

HFR

Press Release

BM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Banner
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. …And Finally – Flight attendant has passengers rolling in aisle[more]

    From Orange.co.uk: A video of a US flight attendant turning her safety talk into a comedy routine is proving a huge hit online. More than five million people have watched the clip of Marty Cobb which has her passengers rolling with laughter on a Southwest Airlines flight to Salt Lake City.

  2. Niche Investing – Wealthy investors flock to fine art funds[more]

    From Clickorlando.com: Wealthy investors looking to diversify beyond stocks and bonds are now turning to an unusual money-making vehicle -- the art investment fund. The name says it all: These funds invest in fine art and seek returns by acquiring and selling high-end pieces for profit. Growth

  3. Opalesque Exclusive: Rainwater and Blue Sky - an Australian water fund emerges[more]

    Bailey McCann, Opalesque New York: Financial reporters often tout new funds and investments as uncorrelated investments, but few can say they are uncorrelated to everything but weather. Enter Blue Sky Alternative's water fund which invests in the permanent rights to Australia's water. Sev

  4. University of Michigan allocates $242m to six managers[more]

    From PIonline.com: University of Michigan, Ann Arbor, invested or committed a total of $242 million to one traditional equity manager and five alternative investment funds from its $9 billion endowment. University regents approved the hire of Mittleman Investment Management to run $35 million in act

  5. Performance – Odey flagship hedge fund suffers brutal March as shorts rise, Blackstone first-quarter profit rises 30% on higher fees[more]

    Odey flagship hedge fund suffers brutal March as shorts rise From Valuewalk.com: The tide has turned for the worse for one of Europe’s best performing hedge funds. Crispin Odey’s flagship hedge fund, Odey European has suffered a 4.63% decline for the year after slipping 7.2% in March, ac