The composite Eurekahedge Hedge Fund Index fell 3.1%1, posting one of its worst monthly returns in the last several years. The rough start to the year came about as hedge funds across the board had to contend with margin calls amid steep declines in global equities; the MSCI World Index shed 7.7% on the month, with major regional equity indices posting similar losses (Topix -8.8%; S&P 500 -6.1%; FTSE -8.9%; MSCI Emerging Markets -12.6%).
In terms of regional hedge fund mandates (refer to graph below), North American managers (-1.6%) posted relatively smaller negative returns despite mounting concerns over recession, as healthy gains in short positions in equities and currencies offset some of the losses from other allocations. Market conditions in Europe were choppy as well, but were exacerbated by the turmoil at the French bank Societe Generale involving rogue trading; the Eurekahedge European Hedge Fund Index was down 2.4% on the month. Emerging market-focused managers, however, were the most adversely affected (-6%), as large losses in regional equities in Emerging Asia and Eastern Europe, took a toll on performance.
