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.
