Hedge funds down 0.32% in August amid uncertainty in global markets

Hedge funds witnessed slightly negative returns in August amid increased risk aversion in global markets during the month. The Eurekahedge Hedge Fund Index was down 0.32% during the month, outperforming global stock indices as the MSCI World Index declined by 2.26% in August.

Key highlights for August 2013:

- Global hedge fund AUM declined by more than US$6 billion in August
- Launch activity picks up pace in 2013 with more than 500 funds launched globally July year-to-date
- Hedge funds across major regions outperformed underlying markets in August
- Distressed debt investing remains the best performing strategy in 2013, up 10% as at end-August
- Japanese hedge funds outperformed the Nikkei 225 for the fourth consecutive month, up 18.82% year-to-date

At 2013 year-to-date, Eurekahedge is tracking more than 600 funds that have delivered over 15% and 200 funds that are up more than 30%

Regional Indices

Risk aversion returned to global markets in August driven by a host of factors. The increased likelihood of the United States waging another war in the Middle East, weakening economic situation in emerging markets and continued concerns of QE tapering by the US Federal Reserve (Fed) were the main drivers of the negative market sentiment during the month. Some of the negativity was offset by improving global economic data as the Eurozone emerged from recession and China PMI numbers also displaying positive trends.

Returns were mixed among the various regional mandates with Latin American and North America hedge funds delivering the strongest returns. The Eurekahedge Latin American Hedge Fund Index gained 0.48% in August mostly due to strong returns posted by Brazil-focused funds, which were up on the back of a strong rebound in the Bovespa (up 3.68%). Managers’ holdings were buoyed by surprisingly strong GDP numbers for 2Q 2013 and currency intervention program announced by the Central Bank of Brazil. North American managers outperformed the S&P 500, which declined 3.13% in August. A number of managers had indicated net short positions for August, amid expectations of an announcement of QE-tapering by the Fed, which helped them to post positive returns during the month.

Asian hedge funds outperformed the underlying markets once again, delivering healthy returns amid broadly negative trends in underlying market indices. Managers investing in Asia ex-Japan were up 0.13% while the MSCI Asia ex-Japan index declined 1.22% in August. Japan-focused hedge funds outperformed the underlying markets for the fourth consecutive month, gaining 0.11% while the Nikkei 225 was down 2.04% and the Tokyo Topix declined by 2.27% during the month.

Regional Indices

August
2013*

2013
Returns

2012
Returns

Eurekahedge North American Hedge Fund Index

0.35

5.46

7.93

Eurekahedge European Hedge Fund Index

-0.57

3.11

6.94

Eurekahedge Eastern Europe & Russia Hedge Fund Index

-2.30

-6.96

6.31

Eurekahedge Japan Hedge Fund Index

0.11

18.82

5.97

Eurekahedge Emerging Markets Hedge Fund Index

0.01

0.82

11.28

Eurekahedge Asia ex-Japan Hedge Fund Index

0.13

3.73

12.32

Eurekahedge Latin American Hedge Fund Index

0.48

-0.67

11.32

Strategy Indices

The various strategic indices saw mixed returns with event driven hedge funds posting the strongest gains of 0.95% as managers found various opportunities in a month where markets were driven by news flow. The Eurekahedge Event Driven Hedge Fund Index is up 5.70% August 2013 year-to-date. Distressed debt hedge funds were up 0.35% in the month, outperforming the high-yield sector in August. The BofA Merrill Lynch High Yield Index lost 0.62% in August. Macro investing funds and CTA/managed futures funds delivered the largest losses during the month of 0.85% and 0.79% respectively. Most of these funds invest with a global mandate and the negative returns posted by them dragged the main Eurekahedge index into negative territory for the month. A number of managers reported losses from emerging markets and the fx sector. Trend following strategies were negative during the month amid reversals in equities and some commodities while funds employing short-term systematic strategies delivered some gains.

Strategy Indices

August
2013*

2013
Returns

2012
Returns

Eurekahedge Arbitrage
Hedge Fund Index

0.20
4.22
6.66
Eurekahedge CTA/Managed
Futures Hedge Fund Index

-0.79
-3.03
1.37
Eurekahedge Distressed Debt Hedge Fund Index

0.35
10.00
14.02
Eurekahedge Event Driven Hedge Fund Index

0.92
5.70
8.93
Eurekahedge Fixed Income Hedge Fund Index

-0.25
3.22
11.21
Eurekahedge Long/Short Equities Hedge Fund Index

-0.21
7.02
8.09
Eurekahedge Macro Hedge Fund Index

-0.85
0.09
2.98
Eurekahedge Multi-Strategy Hedge Fund Index

0.04
2.55
7.81
Eurekahedge Relative Value Hedge Fund Index

-1.18
2.28
10.89


Mizuho-Eurekahedge Indices

August
2013*

2013
Returns

2012
Returns

Mizuho-Eurekahedge Index - USD

-1.41
0.67
5.93
Mizuho-Eurekahedge TOP 100 Index - USD

-1.59
0.36
6.46
Mizuho-Eurekahedge TOP 300 Index - USD

-1.62
0.42
5.99


Eurekahedge indices are available for download from www.eurekahedge.com/indices/hedgefundindices.asp and are updated with the latest fund returns at 23:30 GMT every day. Index values and data can be downloaded for free and subscribers can download the full list of index constituents. Please contact indices@eurekahedge.com for more information.

Hedge funds up by 1.02% in July, 70% of funds up

August 2013 Eurekahedge Report:

· Hedge funds up by 1.02% in July, with 70% of reporting funds delivering positive returns during the month

· Funds of hedge funds outperformed single managers so far in 2013, up 3.83% July 2013 year-to-date versus 3.54%

· Japanese hedge funds outperformed the Nikkei 225 for the third consecutive month, gaining 18.43% as at end-July 2013

· As at end-July 2013, Eurekahedge is currently tracking more than 550 funds that have delivered over 15%, 300 funds that are up more than 20% and 100 funds up more than 30%

· Assets under management increased by US$15.1 billion in July and currently stand at US$1.89 trillion

· CTA/managed futures funds in negative territory for the year, down 2.27% year-to-date

Performance update

Hedge funds returned to their winning ways in July as global markets bounced back from a retreat in June amid positive announcements by central banks. The Eurekahedge Hedge Fund Index was up 1.02%[1] during the month and the MSCI World Index[2] was up by 4.83% in July.

July witnessed rallies in global markets which overcame the speculation about the slowdown in the US Federal Reserve's bond-buying program. Although Japanese equities finished lower for the third consecutive month, positive indications on accommodative monetary policy from the US as well as the European Central Bank were supportive for most global indices. Healthy Q2 corporate earnings from the US also helped to drive the upward momentum during the month.

July 2013 and June 2013 returns across regions






All major hedge fund investment regions, witnessed positive returns during the month. The Eurekahedge Asia ex Japan Hedge Fund Index saw the strongest gains amongst all regional mandates – up 1.93%, outperforming the MSCI Asia ex-Japan Index[3] which was up 1.84% in July. North American hedge funds posted gains of 1.44% during the month as the S&P500 surged 4.95% in July on the back of upbeat corporate earnings, Fed announcements as well as positive macroeconomic data.

European hedge funds also posted healthy returns in July, gaining 1.34%. Trends in the regional markets were similar to those in America with European bourses taking cue from central bank announcements. The DAX was up 3.98% in July while the CAC and the FTSE 100 gained 6.79% and 6.53% respectively.

Japanese hedge funds outperformed the underlying markets for the third consecutive month, gaining 0.93% despite declines in the Tokyo Topix (down 0.19%) and the Nikkei 225 (down 0.07%). Japanese equities were pushed into negative territory in July as the yen appreciated against both the dollar and the euro while corporate earnings were also disappointing. Japan focused managers have outperformed their counterparts in other regions in 2013, the Eurekahedge Japan Hedge Fund Index is up 18.43% July year-to-date.

2013 year-to-date returns across regions




Mizuho-Eurekahedge Asset Weighted Index

The asset weighted Mizuho-Eurekahedge Index was up 1.18% in July as the largest constituents of the index, which are some of the largest hedge funds in the world, posted strong performance during the month on the back of short volatility positions. The best performance in July was delivered by a globally investing special situations fund while the worst performance was posted by a fund focused on negative fat tail events.

Index constituents investing globally posted the strongest returns during the month while Asian and emerging markets mandated funds underperformed the main index. Overall, equity focused funds were the best performers in July, in the environment of strongly rallying markets, and remain ahead in the year-to-date measure. The Mizuho-Eurekahedge Long Short Equities Index is up 4.9% July year-do-date.



Asset flows update

Hedge funds were back in the black in July as global markets swung upwards on the back of reassuring announcements from the US and European central banks. The Eurekahedge Hedge Fund Index gained 1.02%[4] during the month bringing its year-to-date return to 3.54%. The MSCI World Index was up by 4.41%[5] during the month.

Total assets under management (AUM) increased by US$15.1 billion during the month, bringing the size of the industry to US$1.89 trillion. Most of the increase in total assets came from positive performance in July as managers gained US$10.1 billion over the course of the month. The industry also witnessed net positive asset flows of US$5.0 billion.

Hedge funds bounce back from lull to deliver winning returns in July

Hedge funds returned to their winning ways in July as global markets bounced back from a retreat in June. The Eurekahedge Hedge Fund Index was up 0.90% during the month, the MSCI World Index was up by 4.83% in July.

Key highlights for July 2013:

- Hedge funds up by 0.90% in July, with 70% of reporting funds delivering positive returns during the month
- Funds of hedge funds outperformed single manager funds in July, up 0.98% and remain ahead year-to-date
- Japanese hedge funds outperformed the Nikkei 225 for the third consecutive month, up 18.63% as at end-July 2013
- Hedge funds witnessed positive asset flows in July; net allocations for the year currently stand at US$75 billion
- As at end-July 2013, Eurekahedge is currently tracking more than 550 funds that have delivered over 15%, 300 funds that are up more than 20% and 100 funds up more than 30%

Regional Indices

July witnessed rallies in global markets which overcame the speculation about the slowdown in the US Federal Reserve’s bond-buying program. Although Japanese equities finished lower for the third consecutive month, positive indications on accommodative monetary policy from the US as well as the European Central Bank were supportive for most global indices. Healthy Q2 corporate earnings from the US also helped to drive the upward momentum during the month.

All major hedge fund investment regions, witnessed positive returns in July. The Eurekahedge Asia ex Japan Hedge Fund Index saw the strongest gains among all regional mandates - up 1.97%, outperforming the MSCI Asia ex-Japan Index3 which was up 1.84% in July. North American hedge funds posted gains of 1.21% during the month as the S&P 500 surged 4.95% in July on the back of upbeat earnings, Fed announcements as well as positive macroeconomic data. Japanese hedge funds outperformed the underlying markets for the third consecutive month, gaining 1.10% despite declines in the Tokyo Topix (down 0.19%) and the Nikkei 225 (down 0.07%). Japanese equities were pushed into negative territory in July as the Yen appreciated against the dollar and the euro while corporate earnings were also disappointing.



Strategy Indices

Most strategies finished the month in positive territory with the exception of CTA/managed futures funds. The Eurekahedge Long Short Equities Hedge Fund Index saw the strongest gains of 1.95% in July, as most global equity markets rallied with the S&P500, FTSE100 and Hang Seng climbing 4.95%, 6.53% and 5.19% respectively. Event driven funds were up 1.54% as the strong IPO and M&A volume in 2013 continued to provide various opportunities for the funds. Distressed debt funds delivered positive returns for yet another month and are up 9.02% year-to-date. The Eurekahedge CTA/Managed Futures Index was the only strategy which saw negative returns of 0.61% in July and 2.12% year-to-date as systematic traders with a global mandate suffered losses. North American CTA/managed futures managers fared relatively better with discretionary strategies witnessing gains of 1.16% in the month.

Hedge funds Assets under management declined by US$21 billion in June: Eurekahedge

• Assets under management declined by US$21 billion in June and currently stand at US$1.89 trillion

• Launch activity picks up with more than 300 funds launched so far in the year

• Eurekahedge is currently tracking more than 500 funds that have delivered over 15% year-to-date and 250 funds that are up by over 20% year-to-date

• Distressed debt funds end 11-month winning run after gaining 21% from June 2012 to May 2013

• CTA/ managed futures funds in negative territory for the year, down 1.35% year-to-date

• Updated figures for May show that the industry grew by US$28 billion during the month

• AUM of North American hedge funds currently at US$1.29 trillion, expected to cross historical high of US$1.3 trillion by end June

• North American and fixed income hedge funds witness largest performance-based declines in almost 2 years

• Hedge funds post largest monthly loss in one year; long/short equity funds end twelve month winning streak


Performance update

Hedge funds recorded negative returns in June ending their seven month winning run, as global markets witnessed broad based declines during the month. The Eurekahedge Hedge Fund Index was down 1.45% in June, outperforming most major underlying markets as the MSCI AC World Index declined 3.10%.

June witnessed some heightened risk aversion in global markets amid slowing economic growth in China and the US Federal Reserve’s indications that it might scale back its bond buying program. Most major equity markets ended the month in negative territory although market fears regarding a disruption to global economic recovery were somewhat allayed near the month-end as the Fed clarified that any tightening of the monetary policy would be hinged upon solid job creation in the US labour market.

June 2013 and May 2013 returns across regions




The S&P 500 index was down 1.50% in June while the FTSE100 and Hang Seng index were down 5.58% and 7.10% respectively. Asia ex-Japan markets were the worst hit as lacklustre manufacturing data from China continued the flow of dreary macroeconomic numbers from China. Japanese stocks proved to be more resilient compared to their counterparts - with the Nikkei 225 and Tokyo Topix down 0.71% and 0.17% respectively. Towards the end of the month, market reaction to the US Federal Reserve’s indicated framework was downplayed with some positive announcements while strong US macroeconomic data and the ECB’s reiteration of its commitment to a loose monetary policy regime added a further confidence to the markets.

With the exception of Japan, all regional mandates ended the month in negative territory with Asia ex Japan focused hedge funds seeing the largest decline. The Eurekahedge Asia ex Japan Hedge Fund Index was down 4.59% as lacklustre economic indicators from China continued to flow in while the mid-month credit crunch, which saw the SHIBOR (Shanghai Interbank Offered Rate) shoot up to 12% further drained market sentiment. The Shanghai A Share index was down 13.9% for the month with a similar picture emerging in the rest of the region as both the Hang Seng and the Kospi index were down 7.1% and 6.9% respectively. The MSCI Asia ex Japan Index was down by 6.75% for the month.

The seven month winning streak of North American hedge funds also came to an end as the Eurekahedge North American Hedge Fund Index was down 0.21% (up 3.95% YTD) – a significant outperformance to the S&P 500 which declined 1.50%. The Eurekahedge European Hedge Fund Index declined 1.13% during the month, making it the third month of negative returns this year for the regional managers. The Eurekahedge Japan Hedge Fund Index was up 0.03% for the month, bringing its year-to-date returns at an enviable 17.25%. While Prime Minister Abe outlined the ‘3rd arrow’ of his economic policy, it did not do much to boost the market and funds with low long exposures were the ones that performed well during the month while some managers with exposure to transport and industrials also reported gains.


Mizuho-Eurekahedge Asset Weighted Index

The asset weighted Mizuho-Eurekahedge Index was down 2.13% in June as the largest constituents of the index underperformed. The top 15 constituents of the index, which include some of the largest hedge funds in the world, were all in negative territory for the month regardless of strategy and assets traded. Even though some of the large funds are focused on volatility trading, which was up during the month, the negative performance of these funds indicates a disconnect between fundamentals and market performance, which was highlighted in June by the decline in US equity markets following positive macroeconomic numbers.

Index constituents focused on Asia Pacific also witnessed strong declines as the Mizuho-Eurekahedge Asia Pacific Index fell 3.69% in June. Meanwhile emerging markets focused funds also continued their dismal performance and the Mizuho-Eurekahedge Emerging Market index declined 3.98% in June bringing its year-to-date return to -2.48%. It is pertinent to note here that the Brazilian real has plummeted 7.33% against the US dollar year-to-date as the world’s sixth largest economy slows down on the back of falling commodity prices.


Asset flows update

Hedge funds witnessed negative returns in June, bringing an end to their seven month winning streak since November 2012. The Eurekahedge Hedge Fund Index was down 0.69% during the month as global markets reverted to ‘risk-off’ mode amid speculation that the US Federal Reserve will slow down its asset purchase program. The MSCI World Index was down by 3.10 % during the month.

Total assets under management (AUM) declined by US$21 billion during the month, bringing the size of the industry to US$1.89 trillion. Most of the negative impact on total assets came from negative performance in June as managers lost US$18.84 billion over the course of the month. The industry also witnessed net negative asset flows of US$2.12 billion during the month.

Hedge funds end 7 month winning streak, down 1.47%

Hedge funds recorded negative returns in June ending their seven month winning run, as global markets witnessed broad based declines during the month. The Eurekahedge Hedge Fund Index was down 1.47% in June, outperforming the MSCI World Index which lost by 3.10% during the month. Key highlights for June 2013: - Hedge funds witnessed first losing month of the year, down 1.47% in June 2013 - Japanese hedge funds outperformed underlying stocks, up by 0.15% in June and 17.38% year-to-date - Launch activity picks up with more than 300 funds launched so far in the year - Distressed debt funds end 11-month winning run after gaining 21% from June 2012 to May 2013 - CTA/Managed Futures funds in negative territory for the year, down 1.35% year-to-date Regional Indices June witnessed a continuation of downside momentum from the end of May as markets reacted adversely to speculation about a slowdown in the FED’s bond buying operations. The S&P 500 index was down 1.50% while the FTSE100 and Hang Seng index were down 5.58% and 7.10% respectively. Asia ex-Japan markets were the worst hit as lacklustre manufacturing data from China continued the flow of dreary macroeconomic numbers from China. Japanese stocks proved to be more resilient compared to their counterparts - with the Nikkei 225 and Tokyo Topix down 0.71% and 0.17% respectively. Towards the end of the month, market reaction to the US Federal Reserve’s indicated framework was downplayed as both the scale and pace of the slowdown in asset repurchase is contingent upon the US economic recovery which is still far from complete. A further boost of confidence was added to the markets as the European Central Bank re-affirmed the continuation of its loose monetary policy. All major hedge fund investment regions, with the exception of Japan, finished in negative territory for the month. The Eurekahedge Asia ex-Japan Hedge Fund Index saw the largest decline among all regional mandates, down by 4.63%. It still managed to outperform the underlying markets as the MSCI Asia Ex Japan Index dropped by 6.75% for the month. The seven month streak of positive returns for North American hedge funds also came to an end as the Eurekahedge North American Hedge Fund Index was down 0.10% (up 4.07% YTD) – a significant outperformance to the S&P 500 which declined 1.50%. European hedge funds saw another month of dismal returns this year with the Eurekahedge European Hedge Fund Index down 1.16%. In contrast, the Eurekahedge Japan Hedge Fund Index was up 0.15% for the month, bringing its year-to-date returns at an enviable 17.38%. While Prime Minister Abe outlined the ‘3rd arrow’ of his economic policy, it did not do much to boost up the market and funds with low long exposures were the ones that performed well during the month while some managers with exposure to transport and industrials also reported gains. Strategy Indices All hedge fund strategies yielded negative returns in June. Multi-strategy hedge funds were the worst performer for the month with a loss of 2.20%, followed by long/short equities (down 1.66%) as the global equity markets witnessed broad-based declines. CTA/managed futures posted the second consecutive month of negative returns, down by 1.14% in June and 1.35% year-to-date. The S&P GSCI precious metals total return index fell 12.21% during the month while CTA managers also suffered losses in equity and bond futures. Eurekahedge indices are available for download from www.eurekahedge.com/indices/hedgefundindices.asp and are updated with the latest fund returns at 23:30 GMT every day. Index values and data can be downloaded for free and subscribers can download the full list of index constituents. Please contact indices@eurekahedge.com for more information.

European hedge fund sector: 7th consecutive month of positive returns

- Hedge funds witnessed 5th consecutive month of net allocations & 7th consecutive month of positive returns – up 4% May year-to-date - Total asset flows for 2013 currently stand at US$56.9 billion - Asia ex-Japan hedge funds outperformed underlying markets for three consecutive months - Eurekahedge is currently tracking almost 500 funds that have delivered more than 15% year-to-date and more than 250 funds that are up more than 20% year-to-date - Distressed debt funds extend winning streak to 11 consecutive months, gaining 22.68% since end-June 2012 - CTA/managed futures funds declined 1.81% in May 2013 Performance update Hedge funds witnessed the seventh consecutive month of positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.32%[1] during the month, while the MSCI World Index[2] declined by 0.45% in May. May started off on a good note with positive economic data from the US, leading to rallies in global equity markets, specifically in North America where market indices reached all-time highs. The US dollar strengthened against most major currencies, going above 100 level against the Japanese yen for the first time since 2009. The positive sentiment turned mid-month amid weak manufacturing numbers from China and uncertainty regarding the withdrawal of the US Federal Reserve’s asset purchase program. May 2013 and April 2013 returns across regions Most major hedge fund investment regions delivered positive returns May, with Asia ex-Japan hedge funds reporting the strongest returns during the month. The managers outperformed the market for the third consecutive month gaining 2.04% in May while the MSCI Asia Ex Japan Index[3] was down 4.35% - the largest returns were posted by funds focused on Greater China, up 4% in May. The Eurekahedge Japan Hedge Fund Index was down 0.15% in May, bringing its year-to-date return to 17.68%, and ending the eight-month winning streak of Japan focused hedge funds. The month’s return represents an outperformance by the managers as the Nikkei 225 declined 0.62% while the Tokyo Topix was down 2.52% during May. Japanese markets witnessed some volatility during the month as the Nikkei fell 7.3% in a single day, amid concerns about US stimulus, before rallying at the month end after some positive announcements from the Japanese central bank. The Eurekahedge North American Hedge Fund Index was up 1.06% in May bring it’s year-to-date return to 4.46%. The S&P 500 was up 2.08% in May but witnessed a mid-month trend reversal, declining to 1630 after reaching an intra-day high of 1687 in the fourth week of May. This trend was also witnessed across European bourses, however most European indices finished the month higher holding on to gains generated after the ECB’s rate cut. The Eurekahedge European Hedge Fund Index was up 0.90% during the month. Mizuho-Eurekahedge Asset Weighted Index The asset weighted Mizuho-Eurekahedge Index was down 0.89% in May as some of the largest constituents of the index underperformed. Since the Mizuho-Eurekahedge Index is US dollar denominated, during months of strong US dollar gains, the index results include the currency conversion loss for funds that are denominated in other currencies – hence the negative returns for the index. Adding to the currency conversion loss were a few large CTA/managed futures and macro investing funds which posted negative returns for the month. The largest returns in May were delivered by funds focused on the mainland China equities. Among the main regional mandates only Asia ex-Japan managers posted flat-to-slightly-positive returns. Asset flows update Hedge funds posted marginally positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.32%[4] during the month as some risk aversion returned to the markets leading to mid-month trend reversals. The MSCI World Index was down by 0.45%[5] during the month. Total assets under management (AUM) increased by US$3.1 billion during May, bringing the size of the industry to US$1.88 trillion. Impact of performance on total assets was slightly negative in May as managers lost US$1.5 billion over the course of the month. On the other hand net flows were positive for the fifth month running with US$4.6 billion in net allocations.

Hedge funds attract US$50 billion in five months

Hedge funds witnessed the seventh consecutive month of positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.20% during the month, while the MSCI World Index was down 0.45% in May. Key highlights for May 2013: - Hedge funds witnessed the 5th consecutive month of net allocations and 7th consecutive month of positive returns - up 3.89% year-to-date - Total asset flows for 2013 currently stand at US$50 billion with total size of the industry at US$1.87 trillion - Asia ex-Japan hedge funds outperformed underlying markets for three consecutive months - up 3.26% since end-February - Eurekahedge is currently tracking almost 500 funds that have delivered more than 15% year-to-date and 250 funds that are up by over 20% year-to-date - Distressed debt funds extended winning streak to 11 consecutive months, gaining 21% since end-June 2012 - CTA/managed futures funds declined by 1.69% in May 2013 Regional Indices May started off on a good note with positive economic data from the US, leading to rallies in global equity markets, specifically in North America where market indices reached all-time highs. The US dollar strengthened against most major currencies, going above 100 level against the Japanese yen for the first time since 2009. The positive sentiment turned mid-month amid weak manufacturing numbers from China and uncertainty regarding the withdrawal of the US Federal Reserve’s asset purchase program. Most major hedge fund investment regions delivered positive returns in May, with Asia ex-Japan hedge funds reporting the strongest returns during the month. The managers outperformed the market for the third consecutive month gaining 2.35% in May while the MSCI Asia Ex Japan Index was down 4.35% - the largest returns posted by funds focused on Greater China, up 4% in May. The Eurekahedge Japan Hedge Fund Index grew 0.42% in May, bringing its year-to-date return to 18.34% and extending their winning run to the ninth month making it the longest winning streak on record for Japanese funds. The month’s return represents an outperformance by the managers as the Nikkei 225 declined 0.62% while the Tokyo Topix was down 2.52% during May. The Japanese markets witnessed some volatility during the month as the Nikkei fell 7.3% in a single day, amid concerns about US stimulus, before rallying at the month end after some positive announcements from the Japanese central bank. The Eurekahedge North American Hedge Fund Index was up 1.06% in May bringing its year-to-date return to 4.46%. The S&P500 was up 2.08% in May but witnessed a mid-month trend reversal, declining to 1630 after reaching an intra-day high of 1687 in the fourth week of May. This trend was also witnessed across European bourses, however most European indices finished the month higher holding on to gains generated after the ECB’s rate cut. The Eurekahedge European Hedge Fund Index grew 0.83% during the month. Strategy Indices Returns were mixed among the different strategic indices, with distressed debt hedge funds posting the strongest gains of 1.87%. Distressed debt managers have witnessed eleven straight months of positive returns, gaining 21% since end-June 2012. The distressed debt sector gained earlier in the month from the positive sentiment around global economic data while the ECB rate cut triggered rallies in the European distressed bonds sector, but the increased risk aversion at the end of the month led to some losses. The BofA Merrill Lynch High Yield Index was down 0.43% in May. CTA/managed futures funds posted the largest negative returns during the month, declining by 1.69% on average. Trend-followers suffered due to the reversal in market sentiment mid-month, although some short-term systematic funds witnessed some gains. A number of managers also reported losses from the energy and precious metals sector. On the other hand some managers investing in FX delivered positive returns gaining from short AUD/USD positions.