June saw a continuation of positive results for the Australian absolute return and hedge fund sector, largely on the back of an ongoing rally in equities, particularly the ASX 200, acco
June saw a continuation of positive results for the Australian absolute return and hedge fund sector, largely on the back of an ongoing rally in equities, particularly the ASX 200, according to a report from Australian Fund Monitors.
Although AFM’s index was positive, outperforming the S&P 500 and the MSCI World ex Australia index, it underperformed the ASX 200 which rallied 3.59 per cent as confidence continued to flow back into investors.
On a 12 month basis to the end of June 2009 the AFM hedge fund index has significantly outperformed the major equity indices, although the 12 month return is still negative at -8.04 per cent. This result includes fund of funds, which if excluded sees the 12 month negative return reduced to -4.31 per cent.
Barring any shocks or a return to the downside volatility experienced during the height of the global financial crisis, AFM says it could see a positive 12 month return by the end of the September quarter.
Whilst still on a comparative basis, two thirds of the funds monitored produced a positive return in June, and 30 per cent have produced a positive return over the past 12 months.
Against the ASX200, 17 per cent outperformed the index in June, and 79 per cent have outperformed over 12 months.
AFM says hedge funds in Australia have protected investors’ capital to a far greater degree than traditional long only funds, all of which have struggled to produce a positive return during the volatility of the past 12 to 18 months.
On an accumulation basis over five years from January 2004, hedge fund investors remain significantly better off than those who invested in the ASX 200 as an index. Since that time the ASX has risen 21 per cent after touching a return of just two per cent to the end of February 2009.
Equity-based funds in the AFM index have returned 60 per cent over the same period, with a return of 44 per cent over the five years to February.
