Hedge funds witnessed slightly negative returns in August amid increased risk aversion in global markets during the month. The Eurekahedge Hedge Fund Index was down 0.23%1 outperforming global stock indices as the MSCI World Index2 declined by 2.26% in August.
Risk aversion returned to global markets in August driven by a host of factors. The increased likelihood of the United States waging another war in the Middle East, weakening economic situation in emerging markets and continued concerns of QE tapering by the US Federal Reserve (Fed) were the main drivers of the negative market sentiment during the month. Some of the negativity was offset by improving global economic data as the Eurozone emerged from recession and China’s PMI numbers posted positive trends.
August 2013 and July 2013 returns across regions
Returns were mixed among the various regional mandates with Latin American and Asia ex-Japan hedge funds delivering the strongest returns. The Eurekahedge Latin American Hedge Fund Index gained 0.36% in August mostly due to the strong returns posted by Brazil focused funds, which were up on the back of a strong rebound in the Bovespa (up 3.68%).
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1Based on 45.07% of funds which have reported August 2013 returns as at 10 September 2013
2MSCI AC World Index All Core (USD)