Pockets of Positive Returns Support Hedge Funds in August
HedgeFund.Net , September 18th, 2008
Early estimates show the HFN Hedge Fund Aggregate Average, an equal weighted benchmark of all single manager hedge funds and CTA/managed futures products in the HedgeFund.net database, was -0.81% in August and -3.32% YTD. The HedgeFund.net database consists of over 8,400 current hedge fund, fund of funds, and CTA products.
Another wave of credit market tightness, falling commodity prices and the resulting impact on emerging market equity valuations all weighed heavily on broad hedge fund returns in August. The HFN Emerging Markets Average was -4.50% in August and -12.63% in 2008. Hedge funds investing in Russia and Brazil's markets had shown resilience prior to July and August, but declining commodity prices appear to have impacted performance. The HFN Brazil Average was -5.05% in August and -3.06% YTD. The HFN Russia Average was -7.30% in August, -18.67% in the last three months and -16.11% YTD.
A testament to how difficult a month August was for equity focused hedge funds; both the HFN Long Only and Short Bias Averages fell during the month, -1.87% and -2.03%, respectively. Since 1988 concurrent negative monthly returns from these two benchmarks has occurred only four times; September 1998 during the height of the Asian financial crisis, May 2004, and now July and August 2008.
Despite the market's volatility in August and more recently in September, there are a large number of funds in several different strategies which are performing very well amidst one of the most difficult environments in recent history.
- Funds focusing strategies around mortgage securities have been the best performing benchmark in 2008. The HFN Mortgages Average was +1.57% in August and +18.56% in 2008.
- Funds which focus strategies around the use and valuations of options have benefited primarily from high levels of equity market volatility. The HFN Options Strategy Average was +2.04% in August and +6.31% in 2008.
- Funds using quantitative tools for determining trading strategies have shown resilience. The HFN Statistical Arbitrage Average was -0.19% in August and +3.26% in 2008.
- Asset based lending funds have seen a large increase in deal supply due to tighter standards at more traditional lenders. The HFN Asset Based Lending Average was +0.73% in August and +5.68% in 2008.
- Commodity focused funds were able to take advantage of volatile markets earlier in 2008 and more recently have been able to avoid significant negative effects of rapidly falling commodity prices. The HFN CTA/Managed Futures Average was -0.27% in August and +9.33% in 2008.
It is due to the diversity of non-equity strategies and effective utilization of long/short equity strategies which has allowed the hedge fund industry to continue to assert itself as a worthy alternative to volatile equity, commodity, real estate and fixed income investments.
A full report on August regional and strategy specific performance will be at http://www.hedgefund.net/ later in the month.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS HedgeFund.net (HFN), a division of Channel Capital Group Inc, is a leading source for hedge fund news and information. Investors who meet HedgeFund.net's accreditation standards are eligible for online access to our database of 8,400+ hedge funds, funds-of-funds and CTA/managed futures products. HFN serves a rapidly growing user base of more than 33,000 accredited investors worldwide. Registered users include a wide range of institutional investors and high net worth individuals. For more information or to register, visit http://www.hedgefund.net/. SOURCE: HedgeFund.net
HedgeFund.net Joel Schwab, 212-381-8065 Managing Director Channel Capital Group Inc.
joel.schwab@hedgefund.net
