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Barclay Hedge Fund Index down 0.29 per cent in August

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Hedge funds slid 0.29 per cent in August, according to the Barclay Hedge Fund Index compiled by BarclayHedge.

“Global equity markets beat a retreat in August as the ‘fear trade’ returned with a vigour after having been smothered by increased risk appetite in July,” says Sol Waksman, founder and president of BarclayHedge. “The fear trade is a product of investor nervousness and typically gives rise to selling of equities and purchases of US treasury bonds.”

The Barclay Equity Long Bias Index lost 2.03 per cent in August, equity long/short was down 0.76 per cent, while the Equity Market Neutral Index nearly held its ground with a 0.10 per cent loss.

Globally, the Pacific Rim Equities Index lost 1.29 per cent, European equities were down 0.50 per cent, and emerging markets slid 0.08 per cent.

On the positive side, the Barclay Equity Short Bias Index rebounded from a 3.21 per cent loss in July with a 2.49 per cent August gain. 

Arbitrage strategies also performed well this month. Convertible erbitrage was up 1.70 per cent, merger arbitrage gained 1.22 per cent, and the Fixed Income Arbitrage Index rose 1.11 per cent.

“The fear trade helped to drive up bond prices in August, and interest-rate sensitive strategies were positively impacted,” says Waksman. “Merger arbitrage did well as HP launched a bidding war for 3Par, Intel purchased McAfee, and BHP pursued a hostile bid for PotashCorp.”

The Barclay Fund of Funds Index lost 0.02 per cent in August, and is down 0.81 per cent for the year.

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