Hedge funds continue to enjoy gains in September

19 Oct, 2010

Hedge funds enjoyed positive returns for the third consecutive month in September 2010, according to the Eurekahedge Hedge Fund Index.
The Eurekahedge Hedge Fund Index advanced to a healthy 5.15% year to date (YTD) return after experiencing its best September on record. The MSCI World Index also posted strong gains of 6.75% for the month.

Hedge funds delivered the second best monthly performance since May 2003, up 3.45% last month. Larger hedge funds with assets under management in excess of $500 million outperformed smaller funds, up 6.35% YTD. Funds of funds also had reason to cheer as they recorded gains of 2.16% in September bringing their YTD to 1.60%.

Hedge funds invested in regional markets advanced strongly in September with Asia ex Japan managers delivering the best performance – up 6.03%. The Eurekahedge Emerging Markets Hedge Funds Index gained 4.20% while the MSCI Emerging Markets Index surged 7.49%.

Emerging markets have witnessed strong flows of capital over the last few months leading to rallies in the underlying equity markets. Managers invested in Asia ex Japan were not the only ones smiling – Eastern European managers posted impressive profits, gaining 3.90% on average and bringing YTD returns to 7.21%.

Managers invested in developed markets also produced positive returns in September with North American managers leading the way. The Eurekahedge North American Hedge Fund Index advanced 3.67% for the month while European and Japanese managers gained 2.26% and 0.71% respectively.

Hedge funds of all strategic mandates also flourished in September – long/short equity funds delivered the best performance gaining 4.33% on average as managers were able to capture most of the upside in the rising markets. Global macro funds and CTA/managed futures funds posted returns of 3.68% and 3.20% respectively as positive movements across most asset classes proved profitable for managers.

Fixed income strategies also traded higher as increased risk appetite helped distressed debt managers register another month of excellent results while a month-end rally in bonds resulted in opportunities for arbitrage, relative value and fixed income managers. The Eurekahedge Distressed Debt Hedge Fund Index continued to lead in the YTD measure, up 10.31% September YTD.