Hedge fund performance was down in July as the Eurekahedge Fund Index dropped 0.12 percent.
The index’s equity benchmark, the MSCI World Index, meanwhile, was also in the red with a decline of 0.83 percent.
For the year to date, hedge funds are up 3.71 percent, slightly outperforming stocks in the MSCI World Index, which returned 3.40 percent during the period.
Regional disparity
Despite strong growth figures in the U.S., data provider Eurekahedge blamed geopolitical tensions in Ukraine, concerns over Portugal’s banking sector and uncertainty about whether the Federal Reserve is going to abandon its zero interest rate policy for a largely negative sentiment in the financial markets.
European and North American funds were the main contributors to losses in July. Funds investing in Eastern Europe and Russia faced the largest slump of 3.28 percent as new sanctions against Russia prompted a sharp sell-off in the underlying equity markets, such as the RTS Index, which lost 10.52 percent in July.
Russia’s main trading partners in Western Europe also felt the impact. Germany’s DAX index lost 4.33 percent and the French CAC lost 4 percent in July. Concerns about Portugal’s banking sector and low levels of inflationary pressure in the Eurozone contributed to European managers posting losses of 1.12 percent.
North American hedge funds meanwhile declined 0.67 percent, following the poor performance of the equity markets toward the end of July. During the period, the S&P500, NASDAQ and Dow Jones finished lost 1.51 percent, 0.87 percent and 1.56 percent, respectively.
Asian markets, in contrast, benefited from China’s strong macro-economic performance.
Consequently, fund managers focusing on greater China were the best performers in July with 3.82 percent after a disappointing start this year.
Hedge funds investing in Asia delivered positive returns, with the Eurekahedge Asia ex Japan Hedge Fund Index posting strong returns of 2.63 percent in July and 6.25 percent for the year to date.
Japanese fund managers posted their third consecutive month of gains, up 0.51 percent as the region’s long/short equity funds were supported by a rising Nikkei, which finished the month up by 3.03 percent, Eurekahedge said. Japanese hedge funds have outperformed the benchmark Nikkei 225 index by over 5 percent year-to-date.
Funds investing in Latin America were boosted by strong Brazilian equity markets and produced their sixth consecutive month of positive returns, gaining 0.65 percent during the month and 3.50 percent for the year.
Emerging markets focused funds continued their positive run with monthly gains of 1 percent and year-to-date gains of 4.08 percent.
Strategy indices
Following the sell-off in the equity markets in late July, long/short equity funds finished the month down 0.18 percent. Event driven, CTA/managed futures and arbitrage strategies also posted losses of 0.57 percent, 0.36 percent and 0.33 percent, respectively, according to the data provider.
Fixed income hedge funds were flat, down 0.03 percent, hit mainly in their exposure to the Russian debt markets.
Multi-strategy hedge funds, in turn, were up 0.44 percent for the month and 3.82 percent year-to-date with fund managers reporting gains from their exposure to Asian equities.
Macro hedge funds posted their third consecutive month of gains, up 0.14 percent for the month and 0.61 percent year-to-date, with managers reporting gains from their long USD-JPY trades, Eurekahedge said. Managers utilizing relative value strategies were up 0.21 percent, while those focused on distressed debt increased by 0.11 percent during the month.
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