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While the US Presidential Elections loomed in the background, markets moved in the rhythm of a series of economic data releases as well as central bank meetings this month. The rate hike action from the Federal Reserve seems quite likely as strong US macro data and a hawkish Fed set the stage for tapering in December though the outcome of the Presidential Elections is yet to be seen. Meanwhile global bond markets saw a sell off on the back of strong economic data from the US, UK as well as concerns over a potential end to the ECB's QE program early next year. The concern remains that with a bottoming out in commodity prices and improving real data, inflation might materialise at a pace not anticipated by major central banks.

Below are the key highlights for the month of October 2016:

Hedge funds ended their 7-month winning streak and were down 0.35% in October. On a year-to-date basis, hedge funds are up 2.98% and have surpassed their annual gains of 1.65% posted in 2015. Global funds of hedge funds are down 1.01% for the year while long only absolute return strategies are up 8.07%. The MSCI World AC (Local) Index is up 1.94% for the year.

Emerging market mandates lead the gains in 2016 up 10.18% - Latin American, Eastern Europe & Russia and India mandated hedge funds are up 22.36%, 14.17% and 13.01% respectively.

Among developed mandates, Japan hedge fund managers were up 1.52% while North American and European managers were down 0.47% and 0.30% respectively. On a year-to-date basis, North American hedge fund managers were up 4.81% while their European and Japanese counterparts were in the red, losing 0.60% and 1.66% respectively.

Distressed debt hedge funds posted the best returns in October and on a year-to-date basis, gaining 2.27% and 10.99% respectively. The US$56.6 billion distressed debt hedge funds sector has grown its asset base by almost US$2.0 billion since March 2016.

The Eurekahedge CTA/Managed Futures Hedge Fund Index posted the steepest decline among strategic mandates in October and was down 2.11%, with underlying trend following strategies declining 3.71% while commodity focused hedge funds lost 1.19%.

Asia ex-Japan hedge fund managers were up 0.51% during the month, with underlying India mandated hedge funds gaining 4.60% while Greater China focused hedge funds declined 1.00% over the same period.

Full performance report:

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