Hedge fund performance in August was characterised by loss mitigation and short-term trading, as persisting concerns over a global economic slowdown produced yet another month of mixed returns across most asset classes. The composite Eurekahedge Hedge Fund Index shed 1.2%1 for the month, even as global commodities (CRB) and equities (MSCI World) dropped 6% and 1.6% in value, respectively. Returns from hedge fund regional and strategy mandates were negative across the board, and the biggest losses (on average) came from directional equity and emerging market allocations.
While equity markets remained extremely volatile through the month, a smattering of major equity indices finished in positive territory. Equity returns generally reflected those from regional hedge fund allocations, as the month’s slide in commodity prices had a visibly heavier impact on emerging equities (China -13%, Korea -8%, Hong Kong -6%, Brazil -6%, India 1.5%, US 1.2%). Consequently, hedge fund allocations to Asia ex-Japan saw the largest erosion in value on average (-2.5%), while distress in the US financial sector was tempered by a more positive economic outlook and hedge fund allocations to North America managed to finish the month flat (0.02%).
