Australia

Australian hedge funds outperform local index by ten per cent

Although Australia’s hedge fund sector has not entirely escaped the damage, it has outperformed the local index by over ten per cent year-to-date to record a small loss of 0.98 per cent.

The first six months of the year were difficult for equity markets in general with the ASX200 falling 11.69 per cent and the S&P500 down 7.57 per cent.

Australian Fund Monitors recorded a 0.71 per cent loss for all funds in June, with equity based funds down 0.90 per cent and non-equity based funds down 0.40 per cent.

Across the industry, performance has been mixed. The best performing fund year to date has returned over 40 per cent, while the worst has lost almost 35 per cent. Although over 90 per cent of funds have outperformed the ASX year to date, only 47 per cent produced positive returns.

Australian Fund Monitors says this might give some clue to why there is frequently such a negative connotation to hedge funds in the mainstream media, and thus in the main street itself.

“It is too easy for a determined critic to find a fund that has not performed, a manager that charges high fees while underperforming, or one who has dealt leniently with the truth, or loosely with other people's money,” it says.

These examples are in the minority. Increasingly investors are accepting the fact that a well researched and constructed portfolio of hedge funds provides the potential for positive returns, protection of capital in falling markets, and lower volatility than traditional managed equity investments, Australian Fund Monitors says.

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