Hedge funds were up 1.36 percent in August with performance-based gains of approximately US$5.5 billion, data provider Eurekahedge reported.
However, the Eurekahedge Hedge Fund Index trailed equities overall as the MSCI World Index gained 2.48 percent during the month.
Hedge fund performance rebounded after investors redeemed US$4.72 billion in July, resulting in the largest net asset outflows this year.
Modest GDP figures from the United States and supportive interest rate policies from central banks, such as quantitative easing by the European Central Bank, resulted in more positive investor attitudes which pushed equity markets higher and drove volatility down during the month, Eurekahedge said.
Macro-economic statistics indicating an economic slowdown in China led to mixed results in the Asian markets with more economic stimulus measures expected from the Chinese government.
On a year-to-date basis the MSCI World Index returned 5.96 percent, outperforming hedge funds with 4.22 percent. Managers investing in emerging markets and North America delivered the best returns of 5.61 percent and 5.44 percent, respectively, for the year so far.
In August, hedge funds focused on North America were up 1.54 percent amid gains in underlying markets as the MSCI North America Index increased 3.81 percent during the month. Managers investing with an emerging market and Asia, excluding Japan, also saw strong gains of 1.50 percent and 1.46 percent, respectively, with Asian funds attributing much of their gains to their exposure to Thai and Indian equities which underwent strong rallies due to an improving outlook for the regional economies.
India focused hedge funds posted their seventh consecutive month of gains, up 1.92 percent in August and 28.17 percent year-to-date.
Latin and North American mandates saw strong gains in August, with Latin America focused hedge funds delivering the largest gain of 2.27 percent as underlying equity markets in Brazil saw a sharp rally in anticipation of the coming elections. The Brazil IBOVESPA grew 9.78 percent in August and is up almost 19 percent this year.
With second quarter GDP figures showing a contraction in Europe’s largest economy, Germany, European managers were up only 0.46 percent. The conflict in Ukraine and sanctions against Russia further depressed investor attitudes in August.
Eastern European funds lost 1.35 percent during the month and 6.96 percent year to date, making the region the worst performer in 2014.
Japanese hedge funds posted gains in each month and were up 1.35 percent in August, outperforming Japanese stocks, with the Nikkei 225 dropping 1.26 percent. For the year, hedge funds have outperformed Japanese equity markets by 7 percent. In August stock markets reacted to sharp contraction of the Japanese economy in the second quarter following a sales tax hike in April.
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