The Scotia Capital Canadian Hedge Fund Performance Index was up 0.65% on an asset weighted basis and up 1.24% on an equal weighted basis in January. The Index underperformed broader equities and global hedge fund peers on both asset and equal weighted bases.
Broader equity markets rallied in January, starting 2012 on a strong note as volatility subsided. Key themes driving performance included a continued improvement in US economic indicators, better than expected indicators from China, and the ECB’s long-term re-financing operation that was designed to bring some stability to the ongoing European sovereign debt issues.
The rally in US equities was helped along by a low interest rate environment, as seven of ten sectors helped the S&P 500 kick off the year at 4.36%. Materials, IT and Healthcare led the pack in the Canadian equity rebound in January, as the S&P/TSX posted a solid 4.16%. Commodities were a mixed bag. While precious metals rallied strongly, with gold and silver posting 11.12% and 19.18% respectively, oil was volatile as Europe and the US imposed sanctions on oil-producer Iran. In FX, the USD weakened against major currencies.
Canadian hedge funds posted broadly positive results in January. Manager performance was widely dispersed in the month of January. Most managers were able to take advantage of the broader equity rally. Managers remain cautious in anticipation of further market uncertainty.
The aim of the Scotia Capital Canadian Hedge Fund Performance Index is to provide a comprehensive overview of the Canadian Hedge Fund universe. To achieve this, index returns are calculated using both an equal weighting and an asset-based weighting of the funds. The index includes both open and closed funds with a minimum AUM of CAD15 million and at least a 12 month track record of returns, managed by Canadian-domiciled hedge fund managers.
