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Hedge Fund Performance Commentary

The Eurekahedge Hedge Fund Index was up 0.76%1 in August, trailing behind the global equity market as represented by the MSCI ACWI (Local) which gained 2.45% over the same period.

Global markets were buoyed by a rise in investor risk appetite due to the continuation of highly accommodative monetary policies and the dovish comments made by Federal Reserve chairman Jerome Powell during the Jackson Hole symposium. Despite the surge in daily COVID-19 cases across the globe driven by the highly infectious Delta variant, the high vaccination rate in many developed economies have meant a slower rise in the rate of hospitalisations compared to previous waves, allowing their governments to avoid a return to costly lockdowns and to press on with their economic reopening plans. Meanwhile, data from Israel and the UK have suggested that the level of antibodies from the vaccines wanes after about six months, prompting some countries to announce booster programmes to deliver third doses to their populations. The US consumer price index softened slightly in August to 5.3% year on year, suggesting that some of the upward pressure on inflation is beginning to wane. Over in Europe, returns were positive among equity benchmarks in the region with the Euro Stoxx 50 taking the lead with a gain of 2.62%. Flash PMI for manufacturing and services in August came in at 61.5 and 59.5 respectively and inflation rose 0.8% in August to 3.0% year on year, suggesting that the momentum of the economic recovery remains strong. Returns were mostly positive across geographic mandates in August with European hedge funds in the lead with a return of 1.02% while Latin American hedge funds trailed behind their geographic peers with a return of -1.09%. Across strategies, distressed debt and long/short equities hedge funds outperformed their strategic peers with returns of 0.98% and 0.97% respectively throughout the month.

Roughly 67.1% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in August, and 33.5% of the hedge fund managers in the database were able to maintain a double digit return in 2021.

Figure 1: August 2021 and July 2021 returns across regions

Figure 2 illustrates the 2021 performance of hedge fund managers across regions. As of August year-to-date, all of the geographic mandates have recorded positive returns. Global hedge funds registered their best August year-to-date return since 2009 with a return of 8.54%, supported by the strong performance of the MSCI ACWI (Local) which has returned 16.19% over the same period. North American hedge funds outperformed their regional peers with a return of 11.94%, followed by European hedge funds which returned 7.77%. At the other end of the spectrum, Latin American hedge funds lagged the group with a return of 1.04%.

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1Based on 78.32% of funds which have reported August 2021 returns as at 20 September 2021
2MSCI ACWI (Local)