Introduction
Hedge funds posted their fourth consecutive month of gains returning 0.93%1 in April, while the MSCI World Index2 was up 1.25%. The NYSE Composite posted gains of 1.38% as of April, despite mediocre retail sales slump figures. Investor optimism fuelled by aggressive stimulus measures by the Chinese central bank is reflected in the strong climb of the CSI 300 Index closing the month of April with gains of 17.85%. With a continued equity rally in Japan headed by Japanese pension funds and further quantitative expansion by Bank of Japan, the Nikkei 225 closed April with gains of 1.63%. Meanwhile, in Europe, the ‘Grexit’ decision has yet to be made as talks towards averting the Greek government default are still in progress.
Figure 1: Figure 1: March and April 2015 returns across regions
Asia ex-Japan managers were the best performers of the month, with gains of 8.26%. Hedge funds with a Greater China mandate posted stellar gains as investor optimism remained high following the aggressive stimulus measures introduced by the Chinese central bank. The CSI 300 Index gained 16.87% in April, outperforming its previous month of gains. The Eurekahedge Greater China Hedge Fund Index posted the best regional gain of 15.50% as of April 2015. Japanese funds came in second with gains of 1.89%, bolstered by moderate performance of Japanese equities as at April’s close.
While Japanese first quarter growth is moderate at best, the country is precariously perched between the effects of a more expansive quantitative easing versus a potential further consumption tax hike from 8% to 10% later in 2015. The first consumption tax hike seemed to have dampened the efforts of Japan’s first round quantitative easing as inflation rate has failed to hit its two-year target of 2%.
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