The Eurekahedge Hedge Fund Index was up 0.90%1 in November, supported by the market’s optimism towards the progress of the US-China trade talks. The underlying equity market as represented by the MSCI ACWI (Local) gained 2.76% over the same period. US equity markets recorded new all-time highs during the month, as a result of the strong corporate earnings combined with the positive geopolitical development. European equities also pushed higher as Germany narrowly avoided recession, defying market expectations. The CAC40 and DAX gained 3.06% and 2.87% over the month. Over in Asia, the enactment of the Hong Kong Human Rights and Democracy Act was seen as a possible headwind against the progress of the ongoing US-China trade negotiations, weighing on the region’s risk outlook. Meanwhile, the wait-and-see approach of the Fed and the ECB towards their policies pushed the yields of the sovereign bonds higher during the month, resulting in the weakness of the government bond market.
Approximately 67.7% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in November, and 33.2% of the fund managers in the database were able to generate double-digit returns over the first 11 months of the year. Returns were positive across regions, with North American fund managers up 1.59% in November, thanks to the strong equity market performance in the region. Fund managers focusing on Asia ex-Japan underperformed their regional peers as they returned 0.28% over the month. Looking at year-to-date performance, Asia ex-Japan hedge funds have returned 9.42%, ahead of their North American peers who were up 7.86%.
Figure 1: November 2019 and October 2019 returns across regions
Figure 2 illustrates the year-to-date performance of hedge fund managers across regions. Supported by the strong performance of the global equity and bond markets, all regional mandates were up for the year, with Latin American hedge funds leading the pack with their 10.42% return. On the other end, fund managers focusing on Japan have returned 5.24% year-to-date, trailing behind the other regional mandates.
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