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Alternative Market Briefing

Hedge funds down in May but 42% of funds book profits amidst re-escalating US-China trade war

Wednesday, June 12, 2019

Laxman Pai, Opalesque Asia:

The Eurekahedge Hedge Fund Index slumped 0.63% in May as hedge fund managers struggled to generate returns during the risk-off month.

According to Eurekahedge, the Trump administration's decision to raise tariffs on $200bn of Chinese imports signalled the escalation of the trade conflict between the US and China, leading to retaliatory tariffs from the other side.

The worsening global economic outlook pushed global equities into the red for the month, as indicated by the 6.12% decline posted by the MSCI ACWI (Local). On the other hand, the US 10-year treasury yield dipped to its lowest point in almost two years, as investors expect that the Fed will have to cut interest rates in near future.

Returns were mostly negative across geographic mandates in May, with Asia ex-Japan fund managers down 1.44%, and North American fund managers down 1.17%. Across strategies, managers utilising equity long-bias and trend following strategies suffered the biggest losses, as the two mandates were down 3.05% and 2.62% respectively.

Roughly 42.3% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in May, and 13.9% of the hedge fund managers in the database managed to maintain double-digit returns over the first five months of 2019.

Looking at year-to-date performance, fund managers utilising equity long-bias strategies maintained their place at the top with 7.84% gain, despite the losses they......................

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