Research

Hedge Fund Performance Commentary

Introduction

Hedge funds bounced back with strong positive performances in July after flat to slightly negative returns in the previous two months. The Eurekahedge Global Hedge Fund Index, which tracks the performance of more than 2,500 hedge funds on an equally weighted basis, gained 1.47% in July, bringing the year-to-date figure back in positive territory to 1.20%1. The MSCI World Index also posted strong gains of 5.65% with its year-to-date July measure at -2.94%.

Returns across all regions were positive in July, with the exception of Japanese hedge funds which registered a slightly negative performance. The best performers were managers investing in emerging markets, led by Asia ex-Japan funds. The Eurekahedge Asia ex-Japan Hedge Fund Index gained 2.56% during the month as the predominance of long/short equity funds in the region saw the index capture most of the upside in trending equity markets. The MSCI EM Asia Index was up 4.01% while the Shanghai Composite gained 10%. Latin American funds also posted strong returns of 2.44%, with the Bovespa index up 10.80% for the month.

North American and European managers also delivered strong results in July, gaining 1.54% and 1.51%, respectively, as stronger-than-expected corporate earnings and positive results from the European bank stress tests translated into bullish movements in underlying markets.

The chart below shows hedge fund returns for June and July 2010 across different geographical mandates.

June and July 2010 Returns

In the July year-to-date measure, Latin American managers have delivered the best returns – the Eurekahedge Latin America Hedge Fund Index is up 3.48% so far this year. This returns stands as a hefty outperformance over the underlying markets as the MSCI EM Latin America Index is down 2.94% July year-to-date. North American funds also stand with healthy returns for the year so far, up 2.34%; comparatively, the S&P 500 is down 0.11% July year-to-date. North American managers have consistently….

 

 

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Footnote

1 Based on 66.95% of the funds reporting their July 2010 performance as at 17 August 2010
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