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Laxman Pai, Opalesque Asia:

Hedge funds posted mixed performance for September as U.S.bonds yields increased, with strategy gains led by fixed income-based relative value arbitrage, while macro currency led sub-strategy performance as the U.S. Dollar gained against the Japanese Yen, said a report by HFR.

Declines in Equity Hedge exposures offset positive contributions from credit and interest rate-sensitive Relative Value Arbitrage strategies

With the HFRI Asset Weighted Composite Index posting a narrow decline of -0.05 percent, larger hedge funds topped the performance of smaller funds for the month, the report said.

The release quoted Kenneth J. Heinz, President of HFR, saying that: "Financial market risk increased across a wide continuum in September, including rising U.S. interest rates associated with accelerating economic growth, rising Italian bond yields and EU budget uncertainty, regulatory risk and record valuations in US technology equities and ongoing political uncertainty over both trade and social policies."

"Each of these risks, which have accelerated into October, has contributed to increased risk of contagion and increased prospect for near term volatility or major dislocations across asset markets," he added.

"Mixed hedge fund performance in September reflects these increases in risks, including not only defensive, hedged positioning but also fluid expectations for opportunities created or to be created by such dynamic developments. T......................

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