Hedge funds flat in August, up 2.5 percent for the year

The performance of the average hedge fund was flat in August, based on the Eurekahedge Index, which returned 0.03 percent for the month.

CTA/managed futures and macro hedge funds were the main drivers for the weaker performance, data provider Eurekahedge said in its September report.

Equity markets performed comparatively better. The MSCI World Index for example was up 0.48 percent in August.

“While August was a relatively quiet month, central bank actions dominated the trading scene, especially towards the end of the month. This affected much of the trend-following and commodity-focused hedge funds, both of which are subsets of the broader CTA/managed futures strategy,” Eurekahedge said.

CTA/managed futures hedge funds declined 1.91 percent and macro hedge funds dropped 0.32 percent.

Asia, excluding Japan, was the best performing region for funds with a regional focus, up 1.26 percent. Distressed debt, the highest yielding strategy, gained 1.71 percent during the period.

About 60 percent of funds, many of them long/short equity mandated funds, produced positive returns during the period.

The ratio is about the same for the year to date, with 14 percent of these managers generating returns of more than 10 percent during the first eight months of the year. Overall, hedge funds are up 2.58 percent for the year.

Managers with a focus on Latin America performed especially well in 2016, with returns of 15.79 percent.

Brazil’s former president, Dilma Rousseff
Brazil’s former president, Dilma Rousseff

Eurekahedge noted that former Brazil President Dilma Rousseff’s impeachment had a positive effect on the Latin American market, and Brazil’s Ibovespa jumped 33.57 percent over the past eight months alone. In addition, the overall weakness of the U.S. dollar had also propped up the performance of the underlying Latin American commodities sector over the past eight months, the data provider said.

Among developed mandates, North American hedge funds are up 4.52 percent in 2016, but European and Japanese hedge fund managers were down in negative territory, declining 1.08 percent and 3.73 percent respectively.

Preliminary data showed investors redeemed more than US$2 billion from the hedge fund industry in August, bringing total three-month outflows to $23.8 billion.

Since the beginning of the year, however, total hedge fund assets grew by US$17.6 billion. The industry’s total assets currently stand at US$2.26 trillion.