The HFN Hedge Fund Aggregate Index rose by 1.72 per cent in July and 1.84 per cent in the first seven months of 2010.
The S&P 500 Total Return Index was up 7.01 per cent in July and down 0.11 per cent YTD.
Hedge fund assets increased by an estimated 1.37 per cent in July to USD2.249trn. Investor’s flows accounted for an estimated net increase of USD9.3bn, the second highest monthly net investor inflow in 2010. Performance added an additional USD21.09bn.
Positive net investor flows in July followed the industry’s first net outflow in June. The return to net inflows is a positive sign as it reversed a four month trend where the rate of inflow slowed and turned negative in June.
Long biased equity focused strategies produced the best returns in July and emerging markets and energy sector funds were best, however all groups underperformed broad equity markets.
Long/short fund returns lagged the S&P significantly, indicating managers tended to remain cautiously positioned in July.
Fixed income strategies were mostly positive and markets favoured those holding riskier assets. Directional strategies outperformed arbitrage and corporate bond strategies performed best while government bond strategies lagged, though all groups were positive on average.
Commodity strategies were mixed and the group underperformed the rest of the hedge fund industry mostly due to losses in funds investing in the metals sector.
