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Fifth straight month of hedge fund gains fuels investor confidence

Tuesday, September 15, 2020
Opalesque Industry Update - As Wall Street experienced its best August since the 1980s, the hedge fund industry posted its fifth straight positive month returning 2.42% in August, according to the Barclay Hedge Fund Index, compiled by BarclayHedge, a division of Backstop Solutions. By comparison, the S&P 500 Total Return Index was up 7.19% in August.

For the year-to-date, the hedge fund industry added to its gains in August, returning 2.40% for 2020. The S&P Total Return Index returned 9.74% over the same period.

All but three hedge fund sectors tracked by the Barclay Hedge Fund Indices were in the black for August.

"The COVID-19 pandemic remained a very real factor for businesses, economies and societies in August, but investors continued to see significant causes for optimism," said Sol Waksman, president of BarclayHedge. "Stock markets posted record results as U.S. durable goods orders exceeded expectations, home sales surged and consumer spending continued to increase, with markets responding accordingly."

In August, the Pacific Rim Equities Index led the way among hedge fund sectors with a 4.60% return. The Emerging Markets Asian Equities Index returned 4.35%, the Emerging Markets Asia Index and Emerging Markets Global Equities Index each produced a 3.76% yield, the Healthcare & Biotechnology Index was up 3.72% and the Emerging Markets Eastern European Equities Index posted a 3.35% return.

The few sectors in the red in August included the Emerging Markets Latin American Equities Index, down 2.32%, and the Emerging Markets Latin America Index, off 1.26%, as Latin American economies and corporates continued to be particularly stressed by the COVID-19 pandemic. The third sector in negative territory for August was the Equity Market Neutral Index, off 0.72% for the month.

For the year-to-date, hedge fund sectors were split in August between those in the black and those in the red. Leading gainers for the year included the Technology Index, up 15.74%, the Volatility Trading Index, gaining 12.15%, the Emerging Markets Asian Equities Index, returning 10.04% on the year, the Healthcare & Biotechnology Index, up 9.90%, and the Fixed Income Arbitrage Index, gaining 8.52%.

Among the sectors in the red for the year were the Emerging Markets Latin American Equities Index, down 13.67%, the Emerging Markets MENA Index, losing 5.91%, the Emerging Markets Eastern European Equities Index, slipping 5.00%, the Emerging Markets Global Equities Index, off 3.63% and the Pacific Rim Equities Index, down 3.45%.

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