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Hedge funds down 0.78% in August

Friday, September 13, 2019
Opalesque Industry Update - The hedge fund industry posted negative returns in August, dropping 0.78%, according to the Barclay Hedge Fund Index, compiled by BarclayHedge, a division of Backstop Solutions. By comparison, the S&P Total Return Index was down 1.58% in August.

Despite the down month, hedge funds remained in positive territory for the year, gaining 6.86% through August 31. The S&P Total Return Index returned 18.35% on the year through August.

August's hedge fund difficulties were fueled by the usual suspects: the U.S.-China trade war, ongoing no-deal Brexit uncertainty, and recession fears.

"August proved to be a particularly challenging month for investors, with stocks falling as the U.S. and China ratcheted up their tariff battle and both countries experiencing a slowdown in manufacturing," said Sol Waksman, president of BarclayHedge. "Shrinking economies in Germany and the U.K. coupled with the impact of an inverted yield curve helped to bring about August investment results that many might prefer to forget."

All but a handful of hedge fund sectors were in negative territory for the month. Sectors with positive August returns included the Global Macro Index, returning 2.19% for the month, the Distressed Securities Index, up 1.17%, the Convertible Arbitrage Index, gaining 0.64%, the Merger Arbitrage Index, posting a 0.30% August return, and the Equity Market Neutral Index, up 0.12% on the month.

Among the sectors losing ground in August were the Emerging Markets Latin America Index, down 11.80%, the Emerging Markets Global Fixed Income Index, off 8.37%, the Emerging Markets Latin American Equities Index down 3.47%, and the Emerging Markets Asian Equities Index, dropping 2.20% in August.

"The U.S.-China trade war continued to pressure emerging markets and a strengthening US dollar increased energy costs and the costs of servicing debt denominated in USD," said Waksman.

All hedge fund sectors but two remained in positive territory year-to-date through August. Only the Volatility Trading Index, down 1.33%, and the Equity Market Neutral Index, off 0.20%, were in the red for the year.

Among the leading year-to-date gainers were the Emerging Markets Eastern European Equities Index, posting a 16.99% return, the Emerging Markets Eastern Europe Index, up 16.83%, the Technology Index, with a 12.84% gain, Healthcare & Biotechnology up 11.94%, and Emerging Markets Latin American Equities with a 9.86% return year-to-date.

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