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Hedge Fund Performance Commentary

The Eurekahedge Hedge Fund Index was up 1.38% in June, driven by the strong performance of the global equity market as represented by the MSCI ACWI IMI (Local), which gained 2.70% over the same month. Global equities benefitted from the resumption of economic activity of most countries combined with an upbeat macroeconomic data boosting investors' optimism towards a faster-than-expected recovery of the global economy from the crisis. The US equity benchmark registered strong performance, as the labour data, particularly the nonfarm payroll, beat the market consensus by a substantial margin. The tech-heavy NASDAQ was up 4.05% in June, bringing its year-to-date return to 10.05%, while the S&P500 was up 0.87% during the month. In the same vein, European equities rallied, supported by the proposed stimulus package totalling 750 billion euros by the EU leaders to soothe the economic pain brought by the coronavirus. The DAX and CAC 40 were up 6.25% and 5.12% over the month, respectively. Over in Asia, despite the looming trade tension between the US and China, the Chinese equity market recorded a strong performance on the back of strong macroeconomic data, particularly the Purchasing Manager Index, which returned to 50 – an expansion level. The Shenzhen Composite posted a double-digit return of 10.56%, bringing its year-to-date return to 14.66%, while the Hang Seng returned 6.38% throughout the month. Returns were positive across geographic mandates in June, with fund managers focusing on Asia ex Japan up 3.78%, outperforming their North American and European peers who were up 1.76% and 1.72%, respectively. Across strategies, multi-strategy, long/short equities, and fixed income fund managers were up 2.42%, 2.21% and 2.00% respectively throughout the month.

Roughly 69.0% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in June, and 16.0% of the hedge fund managers in the database were able to maintain double-digit returns over the first half of 2020.

Figure 1: June 2020 and May 2020 returns across regions

Figure 2 illustrates the 2020 performance of hedge fund managers across regions. Most regional mandates were down for the year due to the spread of the COVID-19 outbreak which resulted in massive sell-offs in risk assets in the first quarter of 2020. Asia ex-Japan hedge funds led the pack with 1.22% return over the first half of 2020, outperforming their peers focusing on North America and Europe which slumped 0.52% and 4.14% respectively over the same period.

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