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September 2010 Hedge Fund Performance Commentary

Introduction

Hedge funds were up for the second month running as managers outperformed the underlying markets in August. The composite Eurekahedge Hedge Fund Index advanced 0.46%1 during the month, bringing the year-to-date August returns to 1.71%. The MSCI World Index, on the other hand, was down 3.69%, with its YTD August number falling to -7.51%.

Returns across the regions were muted in August, with the exception of Japanese hedge funds, which registered losses of 1.92%. For the second consecutive month, emerging markets hedge funds were the best performers, with managers investing in Asia ex-Japan leading the way. The Eurekahedge Asia ex-Japan Hedge Fund Index rose 0.66% in August, with managers across all strategic mandates ending the month with positive returns while the MSCI Emerging Markets Asia Index was down 1.69%. Latin American hedge funds were also in positive territory for the month with returns of 0.49%.

Japanese managers suffered the greatest losses in August as the Eurekahedge Japan Hedge Fund Index lost 1.92%. The Nikkei 225 lost 7.5% in the month, breaking below 9,000 points which had been a support level for over a year. A strong Japanese yen, trading at a 15-year high against the US dollar, also translated into declines in the underlying markets. Latin American onshore hedge funds were also in the red as the Eurekahedge Latin America Onshore Hedge Fund Index lost 0.12%.

The chart below shows hedge fund returns for July and August 2010 across different geographical mandates.

July and August 2010 Returns

Latin American hedge funds2 continue to lead in the YTD returns measure – the Eurekahedge Latin America Hedge Fund Index is up 3.77% August YTD. The regional hedge fund sector has more than 70% of the assets invested with an emerging market mandate, which have performed better than the global average this year. Furthermore, more than half…

 

The full article is available in the EH Report. 



Footnote

1 Based on 73.88% of the NAV for August 2010 as at 20 September 2010.

2 For a detailed analysis on the Latin American hedge fund industry, please read the 2010 Eurekahedge Key Trends in Latin America report which will be released in mid-October 2010.