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Hedge funds down 0.78 per cent in August, says Backstop BarclayHedge

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The hedge fund industry posted negative returns in August, dropping 0.78 per cent, according to the Barclay Hedge Fund Index, compiled by BarclayHedge, a division of Backstop Solutions. By comparison, the S&P Total Return Index was down 1.58 per cent in August.

Despite the down month, hedge funds remained in positive territory for the year, gaining 6.86 per cent through 31 August. The S&P Total Return Index returned 18.35 per cent on the year through August.
August’s hedge fund difficulties were fuelled by the usual suspects: the US-China trade war, ongoing no-deal Brexit uncertainty, and recession fears.
“August proved to be a particularly challenging month for investors, with stocks falling as the US and China ratcheted up their tariff battle and both countries experiencing a slowdown in manufacturing,” says Sol Waksman, president of BarclayHedge. “Shrinking economies in Germany and the UK coupled with the impact of an inverted yield curve helped to bring about August investment results that many might prefer to forget.”
All but a handful of hedge fund sectors were in negative territory for the month. Sectors with positive August returns included the Global Macro Index, returning 2.19 per cent for the month, the Distressed Securities Index, up 1.17 per cent, the Convertible Arbitrage Index, gaining 0.64 per cent, the Merger Arbitrage Index, posting a 0.30 per cent August return, and the Equity Market Neutral Index, up 0.12 per cent on the month.
Among the sectors losing ground in August were the Emerging Markets Latin America Index, down 11.80 per cent, the Emerging Markets Global Fixed Income Index, off 8.37 per cent, the Emerging Markets Latin American Equities Index down 3.47 per cent, and the Emerging Markets Asian Equities Index, dropping 2.20 per cent in August.
“The US-China trade war continued to pressure emerging markets and a strengthening US dollar increased energy costs and the costs of servicing debt denominated in USD,” says Waksman.
All hedge fund sectors but two remained in positive territory year-to-date through August. Only the Volatility Trading Index, down 1.33 per cent, and the Equity Market Neutral Index, off 0.20 per cent, were in the red for the year.
Among the leading year-to-date gainers were the Emerging Markets Eastern European Equities Index, posting a 16.99 per cent return, the Emerging Markets Eastern Europe Index, up 16.83 per cent, the Technology Index, with a 12.84 per cent gain, Healthcare & Biotechnology up 11.94 per cent, and Emerging Markets Latin American Equities with a 9.86 per cent return year-to-date.

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