After a record month in May, the Eurekahedge Hedge Fund index returned -0.02 per cent in June while the MSCI AC World Index lost 0.7 per cent on the back of wavering risk appetites and
After a record month in May, the Eurekahedge Hedge Fund index returned -0.02 per cent in June while the MSCI AC World Index lost 0.7 per cent on the back of wavering risk appetites and some profit booking amid mixed economic data.
Equity plays yielded flat to positive returns in June, but fixed income managers had a strong month returning two per cent on average, benefiting from continued strength in the high yield space and the upturn in European government bonds.
Geographically, emerging market allocations had a healthy month, returning 1.1 per cent on average.
Early reporting funds point towards net inflows (USD4bn or 0.3 per cent) into hedge funds for the second consecutive month in June, bringing the industry’s assets to USD1.33trn.
Hedge funds are up 9.4 per cent year-to-date, while the S&P 500 was up 1.8 per cent through 1H 2009.
Nearly 250 hedge funds launches were confirmed with Eurekahedge through 1H 2009, while closures over the period stood at a little over 370.
In terms of regional investment mandates, Asian and Latin American managers had a good month, returning 1.8 per cent and 1.3 per cent respectively. Most gains in Asia came from equity plays in regional markets like Japan, Hong Kong and China, among some others that finished the month positive.
Managers in Latin America made gains from select long and short positions across the equity markets, while also being afforded with opportunities in the currency markets.
North American allocations were up 0.7 per cent, on average, with mixed returns across managers investing in the region. Choppy movements and the lack of clear direction across most assets classes resulted in varied performances.
European funds, on the other hand, ended the month down 0.4 per cent. Most losses came from the equity markets (the FTSE 100 shed 3.8 per cent).
Allocations to Eastern Europe and Russia were down two per cent on average, on the back of a 14 per cent decline in Russian stocks, owing to concerns of weakness in the region’s banking sector. This also went some way in affecting returns across the broad European region.
Most strategies turned in positive returns in June, with fixed income managers faring the best up two per cent on average. Gains across the strategy were realised from shorting US Treasury bonds, which slid lower amid speculation that the Fed may raise interest rates in the near future. On the other hand, European government bonds rose in June, which coupled with another strong month in the high yield space proved favourable to managers of the strategy.
Relative value managers were up 1.6 per cent, with managers employing market-neutral strategies faring well during the month. Managers were also afforded with ample opportunities from the mispricing of securities during the recent market rally, which resulted in unattractive valuations over the near term.
CTAs, on the other hand, lost 1.5 per cent during the month, partly owing to the lack of clear direction in the commodity markets; the CRB index shed over one per cent.
