Hedge funds started the second quarter of 2008 on a strong note, as the composite Eurekahedge Hedge Fund Index rose 1.5%1 on the month. Rallying equity markets, on the back of a sharp increase in risk appetites, coupled with marked reversals across some other asset classes – such as bonds and currencies – were among the factors responsible for the month’s gains. Furthermore, the Fed’s aggressive response (in the form of rate cuts and assistance in the Bear Stearns bailout in March) to the weakness across credit markets and the slowing of economic growth in the US, went some way in improving investor sentiment during April.
In terms of regional mandates, Japanese managers were the best performers in April, with gains averaging 4.2% on the month. While a portion of these unusually high returns can be explained by abnormal gains (in excess of 40%) of some warrant-investing index constituents, a considerably large portion of the gains can be ascribed to the good performance of long/short managers across the region.
