Hedge funds lost 1.04% in November, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index is down 4.70% in 2011.
“The S&P 500 gained 0.10 per cent during the month, concealing stomach-churning intra-month volatility,” says Sol Waksman (pictured), founder and president of BarclayHedge. “Fears that a European banking system meltdown and a slowing Chinese economy would push the US back into recession drove US stocks down nearly eight per cent during the month, before coordinated government action rallied the markets in the final three days of November.”
Fourteen of Barclay’s 18 hedge fund indices lost ground in November. The Emerging Markets Index fell 3.21%, Equity Long Bias gave back 2.00%, Pacific Rim Equities lost 1.96%, and the Convertible Arbitrage Index was down 1.02%.
“The US Dollar gained ground against all major currencies except the Yen, boosted by a flight-to-quality rally,” says Waksman. “Although a good deal of press has been given to speculation on the imminent demise of the Euro, our recent survey found that 80 per cent of hedge fund managers believed there was less than a 50 per cent chance that the Euro would disintegrate over the next 18 months.”
Hedge funds have posted negative returns in six of the last seven months, the longest downward trend since the second half of 2008. The Barclay Emerging Markets Index has lost 11.56% in 2011. The Equity Short Bias Index gained 2.35% in November, Healthcare & Biotechnology was up 0.81%, and the Merger Arbitrage Index rose 0.49%. The Barclay Fund of Funds Index lost 0.77% in November, and is down 5.46% year-to-date.
