Hedge funds continue to struggle as asset weighted returns for the year turn negative
The Eurekahedge Hedge Fund Index was flat-to-marginally positive at 0.05 per cent during August, trailing the MSCI AC World Index (Local) which gained 1.06 per cent over the month.
The Eurekahedge North American Hedge Fund Index maintained its lead gaining 0.84 per cent in August, with underlying long/short equities focused managers up 1.57 per cent during the month. European fund managers posted losses in August of 0.28 per cent, bringing their year-to-date gains down to 0.41 per cent. Rising tensions between the US and China over trade continued to weigh on market sentiment, with Asian hedge fund managers posting their third consecutive month of losses down 0.24 per cent.
Emerging markets focused mandates as a whole were under pressure during the month as the Turkish Lira went into free-fall and concerns arose over the health of emerging economies running significant trade and fiscal deficits in an environment of increasing US dollar strength. Emerging managers with a focus on Turkey posted have posted three month losses of 19.75 per cent through to August, and are down 24.72 per cent year-to-date. Across primary investing strategies, distressed debt, CTA/managed futures and relative value strategies had the strongest showing posting gains of 2.22 per cent, 1.00 per cent and 0.70 per cent respectively during the month.
Roughly 47.6 per cent of the underlying constituents of the Eurekahedge Hedge Fund Index were in positive territory by the end of August, with 10.8 per cent of these managers posting double-digit gains year-to-date. On an asset weighted basis as captured by the Mizuho-Eurekahedge Hedge Fund Index (USD), hedge funds have struggled in 2018 with losses of 1.89 per cent as of August 2018 year-to-date. Despite this bleak picture, North American mandates have done relatively better and are up 3.16 per cent for the year, while across strategies distressed debt and relative value top the tables gaining 8.20 per cent and 3.93 per cent respectively for the year.