Hedge funds returned 0 percent in September but still outperformed equities such as the MSCI World Index, which was down 1.86 percent during the month, according to data provider Eurekahedge.
The firm’s Hedge Fund Index gained 3.87 percent since the beginning of the year, slightly less than stock markets overall, with the MSCI World Index up 3.99 percent during that time.
During the third quarter hedge funds faced three consecutive months of net asset outflows as investors withdrew US$13.3 billion from hedge funds globally.
In developed countries only Japan-focused hedge funds posted gains in September, in a fifth consecutive month of gains, exceeding their benchmark the Nikkei 225 index by nearly 3.5 percent for the year.
Last month markets performed strongly amid speculation that a review of Japan’s government pension fund would lead to increased allocations in the country’s equities, Eurekahedge said. As a result, the Nikkei 225 index rose 4.86 percent during the month.
Indian hedge funds have recorded gains for the past eight months, growing 2.62 percent in September and 30.88 percent year-to-date.
Hedge funds investing in Eastern Europe and Russia were the worst performers last month amid geopolitical tension in Ukraine and further sanctions against Russia, which hit equities and caused the rouble to further depreciate. The Eurekahedge Eastern Europe & Russia Hedge Fund Index dropped 4.08 percent.
Managers investing with a Latin American and emerging market mandate also suffered significant losses of 2.03 percent and 1.52 percent respectively.
Moody’s downgrading of Brazil’s credit rating and the country’s stock market decline, with the IBOVESPA dropping 11.7 percent, were the main contributors.
Hedge funds focused on North America were marginally down 0.18 percent, but still outperformed the benchmark S&P 500 Index, which declined by 1.55 percent in September.
In terms of fund strategies CTA/managed futures funds recorded the strongest gain of 2.47 percent last month bringing the year to date performance to 6.54 percent, the highest out of all strategic mandates, Eurekahedge noted.
September generally saw a flight to safer assets, as the CBOE VOX Index, a measure of investor fear, rose 34.9 percent to 16.31 during the month.
Bonds across all categories saw a fall in prices, with junk bonds experiencing the biggest sell-off. Distressed debt strategies lost 2.24 percent while the Eurekahedge Fixed Income Hedge Fund Index fell 0.60 percent, their biggest monthly loss in 2014 so far.
Long/short equities also reported losses of 0.96 percent, coming under pressure due to global equities as a whole declining in September.