Australian hedge funds rose by 1.5 per cent in July, bringing their year-to-date performance to 0.32 per cent, according to Australian Fund Monitors.
Although on a 12 month basis the ASX 200 is still in positive territory, up 5.86 per cent, over the 11 months period of September 2009 to the end of July 2010 the ASX 200 has gone nowhere.
However, that statistic obscures intra-month volatility which has tested fund managers and long-suffering investors with some wild swings.
In the past year the ASX 200 has made monthly gains or losses in excess of five per cent on six occasions, with the 12 per cent rally for August/September last year offset by the decline of a similar size from April to June 2010.
AFM says these are obviously not markets for trend followers. At the same time, picking the timing of the market’s next rise or fall has not been easy given the abrupt nature of directional changes.
Stock picking has been no easier, as has been shown in the past couple of weeks by the likes of Commonwealth Bank, Telstra, AWB and Leighton.
Equity-based hedge funds have made some headway of close to ten per cent over the past 12 months, while the market has bounced up and down on the same spot. Year-to-date they have outperformed the ASX by close to eight per cent.
Fifteen per cent of all funds in the AFM database turned in a negative performance over the past 12 months, whilst at the other end of the spectrum a similar percentage returned over 25 per cent.