Research

Hedge Fund Performance Commentary

­­Introduction

After five months of consecutive gains, hedge funds posted their first monthly loss in 2015 of 1.19%1 in June, though comfortably outperforming underlying markets as the MSCI World Index2 fell 2.88% during the same month. Asia ex-Japan mandated hedge funds suffered their worst month of losses since June 2013, down 1.58% as Chinese equity markets entered into correction during the month. The Shenzhen and Shanghai Composite Indices declined by 11.78% and 7.25% during the month respectively. Talks between Greece and its creditors further overshadowed markets with European managers also posting losses of 1.13% during the month. Hedge fund managers with exposure to Europe suffered steep losses, due to the sell-off in European equity markets as the escalating Greek debt crisis increased market uncertainty. While Asia ex-Japan and Europe mandated funds have languished this month, Japanese and Latin American managers emerged as the top performers for the month across all regional mandates, up 0.39% and 0.29% respectively despite meek global equity performance and volatile market environment.

Figure 1: Figure 1: May and June 2015 returns across regions
 

 

Japanese managers were the top performers this month with gains of 0.39%, despite a retreat of the Nikkei 225 and the Tokyo Topix, which were down 1.59% and 2.58%. Indeed, the Nikkei 225 was exhibiting price volatilities during June as the stock market was not isolated from the excessive sell off in the Chinese stock market towards the month-end. As the Chinese equity market entered into correction, Japanese equity markets were not spared from the trickledown effect of stock price volatility occurring in the region. Despite this, Japanese managers were able to post positive gains during the month with managers utilising market neutral strategies coming out on top. Latin American managers were the next best performers with gains of 0.29%. Despite flat equity market performance in the Asian, European and North American regions, Latin American stock markets performed relatively well during the month with the IPC General and IBOVESPA gaining 0.78% and 0.61%. Latin American long/short equities managers were also the best regional performer for the long/short equities strategy this month, gaining 0.89%.

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Footnote

1Based on 53.04% of funds which have reported June 2015 returns as at 15 July 2015

2MSCI World Index All Core (Local)

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