Hedge funds had another month of strong outperformance to the underlying markets with the Eurekahedge Hedge Fund Index down 0.8%. In contrast, the MSCI World Index shed 10.5% during the month while the Reuters CRB Index lost close to 4%. The month’s negative return was realised against the backdrop of concerns surrounding the solvency of some major financial institutions and talks regarding the nationalisation of distressed US banks, which, despite the approval of the US$787 billion economic stimulus package in the US, spooked equities across the board. Furthermore, deepening recessionary pressures across some major economies and the resultant negative economic news flow took a toll on the markets; for instance, the news of a record Japanese trade deficit impacted regional equities causing a sharp depreciation in the yen.
