Negative hedge fund returns in October

Hedge funds posted a second consecutive month of negative returns in October, according to data provider Eurekahedge, whose main hedge fund index was down 0.24 percent. Equities such as the MSCI World Index, in turn, finished the month up 1.15 percent.

Investors redeemed about US$1.6 billion in October, which presented the sixth month of negative hedge fund performance in 2014. Net asset flows into hedge funds for the year stand at US$56.9 billion despite investors redeeming a cumulative of US$18.9 billion in the last four months alone, Eurekahedge said.

On a year-to-date basis, hedge funds on average returned 3.47 percent but were outperformed by underlying markets such as the MSCI World Index, which was up 5.18 percent over the same period.

Funds focused on Asia, and especially India and China, were the best performers in October. China A-Share investing hedge funds posted their sixth consecutive month of positive returns and are up 9.90 percent for the year-to-date.

Japan focused hedge funds posted negative returns of 0.76 percent in October despite a rally in underlying stock markets. Managers investing with a Latin American mandate posted small gains of 0.05 percent in October. Eurekahedge’s North American Hedge Fund Index was flat for the month at -0.05 percent and European funds returned -0.36 percent amid deflation fears.

The worst performing mandates were once again funds investing in Eastern Europe and Russia which continued their 13.59 percent decline for the year with a negative performance of 2.26 percent in October.

CTA/managed futures strategies were the top gainers for the month, up 0.26 percent, and maintained their lead over all other strategies with year-to-date returns of 6.30 percent.

In contrast, event-driven funds reported the largest loss out of all strategic mandates. The 2.09 percent drop in October was the biggest loss for this type of strategy since 2011.

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