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Impact Investing

IPE special report May 2018

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Credit concerns ease

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After a significant decline in August, the Eurekahedge Fund of Funds Index advanced a healthy 2% in September as most hedge funds made good their losses. Hedge funds returned an impressive 3.5% in the last month, owing to rallying markets and most asset classes faring well. September marked a reversal in both market sentiment and fund performance as investors started turning to riskier assets once again, especially once the Fed announced a 50 basis point rate cut, thereby easing the credit concerns that lingered in the markets earlier in the month.

With underlying markets seeing renewed strength after a rather dull spell, funds of hedge funds posted healthy returns across all strategies. CTA funds of funds led the way, with returns averaging 4.3% as CTA hedge funds made strong gains (6%) from their investments in commodities (such as gold and oil, among others, which rallied sharply) and currencies, by effectively shorting the depreciating dollar. Long/short and event-driven funds of funds returned 2.2% and 1.5% respectively. The former's investments in long/short hedge funds.

Arbitrage and relative value funds of funds, both returned 1.1%, as arbitrageurs and relative value players made decent gains from quantitative strategies, as well as pair-trades in currencies. Macro (2.3%) and multi-strategy (2%) funds of funds fared well too; as macro hedge funds benefited from trends in currencies and interest rates, as well as from positive economic data from some regions such as increasing exports, coupled with and reducing imports, in the US, signifying improving trade balances, and a 37% increase in company-profits in China for the year up to August, compared to last year. Multi-strategy hedge funds fared well, making gains from all investment-style during the month.

The best performance came from the emerging markets (4%) as equities fared best in emerging regions and domestic currencies appreciated significantly against the depreciating dollar, giving regional hedge fund managers lucrative opportunities. Funds of funds in the Asia Pacific region also posted impressive returns (3.9%) with maximum contribution from hedge funds allocating to emerging Asian countries. Europe and North American fund of fund managers registered returns averaging 1.5% and 1.4% respectively; as hedge funds in Europe largely benefited from equities - particularly large caps, and mining and energy - as well as currency and commodity trades while North American hedge funds, which also gained from equities, currencies and commodities, also got some support from momentum in the debt and LBO financing markets during the month.

For the latest August 2007 returns and 2007 YTD returns for the Eurekahedge hedge fund and fund of funds indices, visit www.eurekahedge.com/indices or contact editor@eurekahedge.com to comment on this report. Rajeev Baddepudi is hedge fund analyst with Eurekahedge in Singapore

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  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

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    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

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    Closing date: 2018-05-31.

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