Research

Hedge Fund Performance Commentary

Introduction

The Eurekahedge Hedge Fund Index ended the month of November down 0.14%1, dragging its year-to-date decline to 2.36%. Hedge fund managers struggled to position themselves to capture the upward movement in the equity markets as they recovered from the slump in October. Throughout the month, only 24.3% of the hedge fund managers tracked by the Eurekahedge Hedge Fund Index were able to outperform the global equity market, as represented by the MSCI AC World Index (Local) which gained 1.11% in November. Dovish stance from the US Federal Reserve and anticipation over the G20 meeting in Buenos Aires helped the North American and Asian equity markets recover from the severe losses they suffered last month. On the other hand, uncertainties continued to loom over the European economies as Brexit negotiation remained inconclusive, and Italy’s budget plan raised concerns over the country’s debt levels. In terms of year-to-date performance, preliminary numbers revealed that roughly 9.5% of the hedge fund managers tracked by Eurekahedge were able to maintain double-digit returns throughout the first eleven months of 2018.

North American hedge fund managers ended the month up 0.48%, recovering a small portion of the losses they suffered in October, during which the Eurekahedge North American Hedge Fund Index recorded its worst performance (-2.76%) since the global financial crisis. The S&P 500 index gained 1.79% in November as the region’s equity markets began to recover. The Eurekahedge Asia ex Japan Hedge Fund Index ended their losing streak and climbed 1.81% in November, as market sentiment improved on the back of expectations that the Fed would increase rates in a more gradual pace.

Figure 1: November 2018 and October 2018 returns across regions
 

On a year-to-date basis, North American fund managers were up 0.87%, as the losses they posted in October wiped out a significant portion of the gains made in the preceding months. Latin American fund managers were up 7.82% year-to-date, owing to the underlying equity market performance which benefited from improving economic outlook and dwindling political concerns. Meanwhile, Asia ex-Japan fund managers continued to lag behind their peers focusing on other regions despite the gains they made in November, with the Eurekahedge Asia ex Japan Hedge Fund Index still down 7.73% year-to-date, following multiple months of losses over the better part of the year.

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Footnote
1Based on 48.30% of funds which have reported November 2018 returns as at 13 December 2018.

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