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Hedge Fund Performance Commentary

The Eurekahedge Hedge Fund Index was up 2.52%1 in July, bringing its year-to-date return to 1.65%, supported by the robust performance of the underlying global equity market as represented by the MSCI ACWI IMI (Local) which gained 3.67% over the same month. In the US, despite the fear of the increasing number of COVID-19 cases, the equity market in the region exhibited a strong run, with the tech-heavy NASDAQ up 8.82%, pushing its year-to-date return to 19.76%, while the S&P 500 returned 6.53% throughout the month, bringing its 2020 performance back into positive territory. The tech companies, particularly the FAANG group, benefitted from the pandemic which resulted in strong Q2 earnings. On the other hand, European equities underperformed owing to the escalation of the US-China trade tension and weak corporate earnings. The DAX ended the month of July largely flat, while the CAC 40 registered 3.09% losses over the same period. Over in Asia, the Chinese economy displayed a robust recovery from the crisis, as seen from their strong PMI numbers and double-digit Q2 GDP growth, which contributed to the performance of the equity market in the region. The Shenzhen Composite and CSI 300 registered 14.24% and 12.20% throughout the month of July. Returns were positive across geographic mandates in July, with fund managers focusing on Asia ex-Japan up 5.15%, outperforming their North American and European peers who were up 2.07% and 1.76%, respectively. Across strategies, CTA/managed futures, multi-strategy and macro fund managers were up 3.56%, 3.30% and 3.00% respectively throughout the month.

Roughly 79.0% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in July, and 20.3% of the hedge fund managers in the database were able to maintain double-digit returns over the first seven months of 2020.

Figure 1: July 2020 and June 2020 returns across regions

Figure 2 illustrates the 2020 performance of hedge fund managers across regions. Most regional mandates recovered from the losses they suffered in the first quarter, thanks to the strong recovery of risk assets which contributed to their performance in recent months. Asia ex-Japan were up 8.32% as of July 2020, strongly outperforming their peers focusing on North America which gained 1.07% and Europe which loss 8.28% over the same period.

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1Based on 46.28% of funds which have reported July 2020 returns as at 13 August 2020