Introduction

Hedge funds started the year with notable outperformance and loss mitigation, as the Eurekahedge Hedge Fund Index rose 0.2%¹ despite the MSCI World and Dow Jones-AIG Commodity indices losing 8.9% and 5.4% respectively through January. This performance was achieved against the backdrop of persistent concerns on the health of the financial sector and discouraging earnings reports for 2008, which also went some way in triggering further redemptions of US$77 billion from the industry during the month.