The Eurekahedge Hedge Fund Index was down 0.05%1 in October 2020, outperforming the global equity market as represented by the MSCI ACWI (Local), which slipped 2.29% over the same period. Global equities ended the month in negative territory due to the reimposition of national lockdowns across Europe, uncertainty in the outcome of the US presidential election, and the breakdown in US fiscal stimulus talks. The acceleration of average daily cases in Europe forced the authorities to reimpose restrictive measures to curb the increasing number of new infections, resulting in the weak performance of the equity market in the region. The DAX underperformed its peers by ending the month of October down 9.44%, while the FTSE100 plunged 4.92%. Over in the US, uncertainty in the recent presidential election combined with the delay of the new federal coronavirus relief package also dented market risk sentiments in the region. The US equity benchmarks were also down but fared better compared to their European peers. The S&P500 and tech-heavy NASDAQ retreated 2.77% and 2.29% throughout the month. Returns were mostly negative across geographic mandates in October. Fund managers focusing in Asia ex-Japan were up 1.21%, outperforming their North American and European peers who returned 0.34% and -0.78%, respectively. Across strategies, event driven, arbitrage and distressed fund managers were up 0.87%, 0.62% and 0.23% respectively throughout the month.
Roughly 58.3% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in October, and 23.5% of the hedge fund managers in the database were able to maintain double-digit returns over the first 10 months of 2020.
Figure 1: October 2020 and September 2020 returns across regions
Figure 2 illustrates the 2020 performance of hedge fund managers across regions. Most regions were still down over the first 10 months of the year due to the spread of COVID-19 which resulted in a massive sell-off of risk assets in the earlier months of the year. Supported by the strong performance of the equity market in China, Asia ex-Japan hedge funds outperformed their peers, with their 11.60% return compared to their North American and European peers who returned 4.35% and -2.29% over the same period. In the same vein, Japanese hedge funds were also down 4.45% as of October 2020.
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