Based on 34.67% of the funds reporting the NAV for July 2010 as at 10 August 2010.
Hedge funds delivered strong positive results in July as the month saw rallies across most sectors and asset classes. The Eurekahedge Hedge Fund Index was up 1.42%1 for the month, bringing the year-to-date July returns to 1.17%. The MSCI World Index also posted strong gains of 5.65%, with its year-to-date July measure at -2.94%.
Below are the highlights for the month:
All regions and strategies posted positive returns in July.
Distressed debt hedge funds advanced 7.63% July YTD and are the most attractive strategy for capital with US$8.7 billion of inflows YTD (15.67% growth).
Event driven funds are up 48.4% since November 2008.
India is the best performing hedge fund region in 2010, up 4.62% YTD.
After two months of high volatility and posting consecutive losses, hedge fund managers across all regions delivered positive returns in July. The month saw a break from the on-off cycle of risk appetite as the markets moved upward through most of the month. Strong rallies in global equity markets were accompanied by gains in the commodity and fixed income sectors as market sentiment recovered on the back of positive news from the US and Europe.
In terms of regional allocations, managers investing in emerging markets posted excellent returns, with the Asia ex-Japan hedge funds standing with the strongest performance. The Eurekahedge Asia ex-Japan Hedge Fund Index gained 3.56% in July as the predominance of long/short equity funds in the region saw the index capture most of the upside in trending equity markets. The MSCI EM Asia Index was up 4.01% in July while the Shanghai Composite gained 10%. Latin American funds continued their strong run by posting profits of 2.56% in the month and bringing their year-to-date July gains to 3.33%.
North American and European managers also delivered strong results for the month, gaining 1.54% and 1.51%, respectively as stronger-than-expected corporate earnings and positive results from the European banks’ stress tests translated into bullish movements in underlying markets.
All hedge fund strategy indices ended July in positive territory, with event driven and long/short equity managers posting the highest gains. The Eurekahedge Event Driven Hedge Fund Index was up 2.67% while the Eurekahedge Long/Short Equity Hedge Fund Index rose by 2.03% as global equity markets rallied. A concurrent rally in the bonds sector translated into gains for funds employing fixed income strategies, with relative value and distressed debt hedge funds returning 2.05% and 1.56%, respectively. CTA/Managed futures funds were also positive for the month, gaining 0.59% as most managers were able to derive profits from the volatile but rising commodity prices.
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