Research

Hedge Fund Performance Commentary

Introduction

Hedge funds bounced into recovery this month — gaining 0.27%1, though still underperforming underlying markets as the MSCI World Index2 gained 1.34%. Equity markets were mostly up this month with the US, European and Japanese equity markets recovering from last month’s losses, while the Chinese equity markets sell-off seemed to show signs of bottoming out following active intervention by the Chinese authorities. Asia ex-Japan suffered their second consecutive month of losses, down 2.60% as its heavyweight Greater China funds were down 8.49%. The Shenzhen and Shanghai Composite Indexes plunged 14.35% and 14.34% respectively during the month. Latin American funds also posted losses of 0.36% as a strengthening US dollar, sliding commodity prices and lacklustre equity markets continue to impact the region. The Brazilian real depreciated 9.21% against the US dollar in July while the Mexican IPC and Brazilian IBOVESPA declined by 0.67% and 4.17% respectively. European focused funds were up in positive territory this month as investor concerns on Greece seemed to simmer after bailout plans were set to put in place after months of negotiation. European focused hedge funds were among the best performers this month, followed by Japanese and North American focused funds – gaining 1.04%, 0.73% and 0.56% respectively.

Figure 1: June and July 2015 returns across regions
 

 

European managers led the table this month with gains of 1.04%, as European equity markets were back in positive territory in July. The DAX and CAC indexes were both up 3.33% and 6.10% while the Euro Stoxx 50 was also up this month – gaining 5.15%. Japanese focused funds came in second with gains of 0.73% with both the Nikkei 225 and the Tokyo Topix up 1.73% and 1.79%. While Chinese and Korean equity markets languished, Japanese equity markets were the only North Asian equity markets to bounce back into positive territory during the month. North American hedge funds posted positive gains up 0.56% this month amid improving macroeconomic data from the United States, bolstering investor optimism in the region with its second quarter GDP just slightly below estimates. US consumer spending, a heavyweight of its economy was also up during the same period. Asia ex-Japan funds performed the worse among all regional mandates, down 2.60% as its Greater China constituents faced heavy losses this month. On a year-to-date basis, all regional mandates were in positive territory. Asia ex-Japan funds led the tables with 9.44%, owing to strong gains in its Greater China constituents prior to June 2015. Japanese managers came in second with year-to-date gains of 6.07% followed by European and North American managers with year-to-date gains of 5.49% and 3.01% respectively while Latin American managers were up 1.61% during the same period.

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Footnote

1Based on 53.40% of funds which have reported July 2015 returns as at 14 August 2015

2MSCI AC World (Local)

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