The Eurekahedge Hedge Fund Index gained 1.3% in July, recording its highest monthly return since April 2021 after three consecutive months of decline, totaling 4.1% in Q2. The recovery was bolstered by the revival of the global equity market, reflected in the 9.1% rebound of the S&P 500. The Federal Reserve raised interest rates by another 75bps in July to combat persistent high inflation, which accelerated to 9.1% in June 2022, the highest since November 1981. However, a slower pace of rises is likely in the mid-term as US GDP contracted 0.9% in Q2, following a 1.6% contraction in Q1, putting the country into a recession.
Despite the July rebound, global hedge funds remained down 4.0% YTD. Nevertheless, the industry has provided excellent protection for investors, as the S&P 500 is down 13.3% this year. Returns were mostly positive across strategies in July, with CTA/managed futures the only exception. It declined 0.4%, dragged by the declining prices of crude oil caused by lower global growth expectations and an uptick in Russian production. Conversely, long/short equity recorded the highest return of 2.2%, supported by the improvement in risk sentiment due to the strong rebound of the global equity market. Returns were similarly positive across most investment regions in July, with Asia the only exception as it declined 0.5% amid weak equity performance in China, as reflected in the 7.0% decline of the CSI 300 Index. North America was the best-performing region, returning 2.5% in July after three consecutive months of decline, totaling 5.9% in Q2
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