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Global equity markets posted mixed declines across most sectors and regions, with steep losses across small cap, Oil Services, Energy and developed European equities only partially offset by gains in Emerging Markets. European equity losses were led by declines in France, Germany, Italy and Russia, while Asian and Emerging Markets equities posted partially offsetting gains led by the Middle East, Brazil, China, Japan and Hong Kong.

Commodities posted steep losses on continued Fed tapering and expectations for excess agricultural harvest, with steep losses led by Natural Gas, Oil, Gold, Corn, Cotton, Hogs and Soybeans. Interest Rates were mixed on the Argentina default and continued Fed tapering, though the US curve flattened with rising yields in shorter dated maturities while long dated yields fell; European yields fell as high yield credit widened.

The US dollar posted gains for the month on safe haven buying, gaining against the Euro, Japanese Yen and British Pound Sterling, as well as against Chilean Peso, Swedish Krona, New Zealand Dollar and Russian Ruble. Hedge funds posted mixed performance as the HFRX Macro Index gain of +0.52% was offset by equity & credit declines, with the HFRX Equal Weighted Index declining -0.52%, while the HFRX Global Hedge Fund Index declined by -0.88%.

HFRX Macro Index posted a gain of +0.52% for the month of July, as Argentina defaulted on sovereign bonds, with positive contributions from Discretionary Fixed Income, FX and Emerging Markets strategies. Macro Discretionary strategies posted gains with contributions from Fixed Income and Developed Markets strategies.

The HFRX Emerging Markets Composite Index posted a gain of +0.39%, with gains concentrated in Emerging European and Asian equity exposure. HFRX Macro: Systematic Diversified Index posted a decline of -0.35% from mixed performance in fixed income, equity and currency exposures with short-term trend following managers outperforming medium-trend strategies.

HFRX Event Driven Index posted a decline of -0.96% for the month of July, with mixed contributions from Distressed/Restructuring managers offset by declines in Equity Special Situations and Merger Arbitrage strategies. HFRX Distressed Index declined -0.21% with contributions from restructurings in Energy sectors in the US offset by exposure to Financials. HFRX Merger Arbitrage Index declined -0.59% for the period, with mixed contributions from transactions in Southside Bank /OmniAmerican Bank, Rockwood/Albemarle, Time Warner, Hillshire/Pinnacle Foods and Tower Financial/Old National Bancorp. HFRX Special Situations Index posted a decline of -1.23%, with contributions from core positioning in American Realty, Hertz, Time Warner, Actavis, Innophos, Comcast, Astrazeneca and Athabasca Oil.

HFRX Relative Value Arbitrage Index posted a decline of -1.09% for the month of July as Argentina defaulted on sovereign bonds, with positive contributions from Convertible Arbitrage exposure offset by declines in Fixed Income and Credit Multi-Strategy exposures. The HFRX Convertible Arbitrage Index posted a gain of +0.06% for the month, as gamma, short equity exposure and volatility gains into month end offset credit losses. HFRX Fixed Income Credit Index and the HFRX Equity Hedge Index posted a decline of -1.55% for the month of July, with positive contributions from Market Neutral strategies offset by fundamental managers. HFRX Market Neutral Index gained +0.22%, with gains across factor-based models as well as fundamental and trading oriented strategies. HFRX Fundamental Value Index and the HFRX Fundamental Growth Index posted declines of -1.50% and -1.93%, respectively, with negative contributions from exposure to small cap global equity and large cap European exposure.