Introduction
The Eurekahedge Hedge Fund Index was down 0.30%1 in September, underperforming the MSCI ACWI (Local), which ended the month up 2.04%. The resumption of the US-China trade negotiations combined with the withdrawal of the controversial Hong Kong extradition bill boosted the two regions’ equity markets early into the month. However, the impeachment inquiry against the US President Donald Trump wiped out a portion of the gains posted by US equities, dragging the S&P 500 down 1.01% through the week ending 27 September. Despite the improving risk sentiment among investors throughout the month, the global bond markets saw yields decline due to the accommodative stance adopted by the major central banks. The ECB announced new stimulus measures, including the resumption of asset purchases, while the Fed decided to cut its rate for the second time this year in September. The commodity market saw a sharp increase in oil prices during the month following the drone attack on Aramco oil facilities, but prices gradually normalised as the Saudi government pledged to restore the lost output by the end of the month.
Approximately 53.9% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in September, and 28.3% of the fund managers in the database were able to generate double-digit returns over the first three quarters of the year. Returns were mostly positive across regions, with Asia ex-Japan fund managers up 0.97%, thanks to the resumption of the US-China trade negotiations. Fund managers focusing on North America returned 0.45%, despite the political concerns surrounding the impeachment inquiry. Looking at year-to-date performance, Asia ex-Japan hedge funds have returned 7.52%, ahead of their North American peers who were up 6.21% over the first nine months of 2019.
Figure 1: September 2019 and August 2019 returns across regions
Figure 2 illustrates the year-to-date performance of hedge fund managers across regions. Supported by the strong performance of the global equity and bond markets, all regional mandates were up for the year, with Latin American hedge funds leading the pack with their 9.12% return. On the other end, fund managers focusing on Japan have returned 1.90% year-to-date, trailing behind the other regional mandates.
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