In one whiplash inducing week on Wall Street, markets have experienced some of the most extreme consecutive pricing swings on record, ultimately resulting in a 13.6% loss for the Dow Jones Global Index month-to-date (to 10 August). But according to results from the Dow Jones Credit Suisse Hedge Fund Index, hedge funds have more or less held their own, despite the turmoil.
"Despite challenging conditions, hedge funds appear to have so far been effective in their attempt to provide a level of capital preservation, and overall have limited losses relative to perceived riskier asset classes such as equities," says Oliver Schupp, President of Credit Suisse Index Co. "The Dow Jones Credit Suisse Core Hedge Fund Index is down 3.7% month-to-date compared to a loss of 13.6% for the Dow Jones Global Index over the same time period."
Brian Peterson, Head of the Hedge Fund Index Group within Credit Suisse Asset Management, LLC, says, "Considering the diversity of managers within the Dow Jones Credit Suisse Core Hedge Fund Index, actions and adjustments vary, but in general, many managers were effectively de-risking in more of a strategic rather than tactical way by reducing net exposure in the weeks, or even months, preceding the correction. At this point, protecting the portfolio seems to be a clear focus, and we see that with many funds holding higher than average cash levels, with some putting that excess buying power to work by adding short positions."
Michael A Petronella, President, Dow Jones Indexes, adds: "With 100% of participating funds now providing NAVs on a daily basis to the Dow Jones Credit Suisse Core Hedge Fund Index, investors can gauge the impact of significant market events on the hedge fund industry in a far more timely and informed fashion than ever before."