The Eurekahedge Hedge Fund Index was down 0.57%1 in September 2020, outperforming the global equity market as represented by the MSCI ACWI (Local), which lost 2.71% over the same period. Global equities ended its five-month rally due to renewed concerns over new government restrictions to curb the increasing COVID-19 cases in Europe and the delay on new fiscal stimulus measures in the US Congress. In the US ahead of the upcoming presidential election, failure to reach a consensus over a new round of economic stimulus contributed to the weak performance of the equity market in the region. The tech-heavy NASDAQ and S&P 500 were down 5.16% and 4.10% during the month, respectively. In the UK, the passage of the controversial post-Brexit bill in the House of Commons, which could breach parts of the terms of the EU withdrawal agreement, resulted in the weak performance of the British Pound, which was down 3.37%, while the FTSE 100 retreated 1.63% in September. Returns were mostly negative across geographic mandates in September. Fund managers focusing in Europe were largely flat, outperforming their North American and Asia ex-Japan peers who were down 0.41% and 0.11%, respectively. Across strategies, event driven, distressed debt and arbitrage fund managers were up 0.82%, 0.55% and 0.24% respectively throughout the month. Returns were negative across geographic mandates in September except with fund managers focusing on Japan up 3.15%, outperforming their North American and Asia ex-Japan peers who were down 0.69% and 0.54%, respectively. Across strategies, event driven, distressed debt and arbitrage fund managers were up 0.91%, 0.55% and 0.30% respectively throughout the month.
Roughly 40.8% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in August, and 22.5% of the hedge fund managers in the database were able to maintain double-digit returns over the first three quarters of 2020.
Figure 1: September 2020 and August 2020 returns across regions
Figure 2 illustrates the 2020 performance of hedge fund managers across regions. Most regions were still down over the first eight months of the year attributed to the spread of COVID-19, resulting in the massive fall of the global equity market in the earlier months of the year. Supported by the strong performance of the Chinese equity market, Asia ex-Japan hedge funds were up 11.17% over the first nine months of the year, outperforming their North American and European peers who returned 3.74% and -1.48% respectively. In the same vein, Japanese hedge funds were also down 1.66% as of September 2020.
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