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Hedge funds flat in August, up 2.50% YTD

Wednesday, September 14, 2016
Opalesque Industry Update - Hedge funds were flat to marginally negative at 0.06% during the month of August with much of this weakness led by underlying CTA/managed futures and macro mandated hedge funds.

On the other hand, underlying markets as represented by the MSCI World Index (Local) were up 0.48%. Close to 60% of the underlying constituent hedge funds for the Eurekahedge Hedge Fund Index were in positive territory this month, with majority of them being long/short equity mandated. Asia ex-Japan hedge funds led performance among regional mandates this month, up 1.24% while distressed debt managers topped the table across strategies, gaining 1.77% over the same period.

As of 2016 year-to-date, close to 60% of managers were in positive territory with roughly 14% of these managers posting year-to-date returns in excess of 10% over the past eight months. Close to 40% of these managers are long/short equity mandated while another 20% are CTA/managed futures mandated hedge funds.

Key highlights for the month of August 2016:

  • Hedge funds declined a marginal 0.06% during the month, and are up 2.50% year-to-date. Preliminary data shows investors redeemed a further US$2.0 billion from the industry in August, which brings total 3-month outflows to US$23.6 billion.
  • Among developed mandates, European hedge fund managers were up 0.55%, followed by North American managers who were up 0.54% while Japanese managers were down 0.13% during the month. On a year-to-date basis, North American hedge fund managers were up 4.52% while their European and Japanese counterparts were in the red - down 1.08% and 3.73% respectively.
  • The Eurekahedge Distressed Debt Hedge Fund Index posted the best returns among strategic mandates in August and was up 1.77% during the month. Managers also posted impressive year-to-date gains, up 7.86% - the best year-to-date returns for the strategy since 2013.
  • Long/short equities hedge funds were up 0.54% in August with equity long bias hedge funds posting an impressive 1.32% gain, boosted by the well-performing global equity markets during the month. Latin American long/short equities hedge funds posted the best year-to-date gains, up 18.96% while Japanese long/short equities hedge funds fared the worst, down 3.66% over the year.
  • Asia ex-Japan hedge funds posted the best returns among regional mandates this month, up 1.24% with strength led by underlying Greater China mandated hedge funds which were up 2.20% in August.
  • CTA/managed futures hedge funds posted the steepest decline in August, down 2.15% with underlying trend following funds down 3.18%, commodity dedicated funds down 1.78% and FX funds down 0.66% during the month.

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