Hedge funds were down 0.48%1 in January, outperforming underlying markets as the MSCI World Index declined 3.74%2 during the month with global markets off to a bumpy start in 2014. Global markets trended downwards during the month led by weak US jobs data and discouraging PMI numbers from China. Market sentiment weakened further towards the month-end as the Fed announced another round of QE trimming which catalysed investor flight from emerging economies and led credence to concerns regarding the health of the global economic recovery. Emerging market currencies also came under sharp selling pressure with markets watching carefully as the global economy transitions to a post-QE world.
Figure 1: December 2013 and January 2014 returns across regions
Hedge funds focused on developed economies delivered positive returns during the month, led by North American fund managers who were up 0.24% - outperforming the MSCI North America Index3 which declined 3.32% during the month. Japanese fund managers posted their fifth consecutive month of positive returns with the Eurekahedge Japan Hedge Fund Index up marginally by 0.08%, outperforming the Nikkei 225 Index which was down 8.45% as the yen strengthened 2.95% against the US dollar during the month.
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1Based on 48.19% of funds which have reported January 2014 returns as at 13 February 2014
2MSCI AC World Index (USD)
3 MSCI AC North America Index (USD)