14/07/2010 Author: Zaki Abushal

Hedge funds head for second down month in a row in June

It looks very much like the hedge fund industry will struggle to finish June in the black; the first time hedge funds have suffered back-to-back losses since the first two months of 2009.

The losses in June won’t be as significant as those in May, but will be an unwelcome reminder that volatile and uncertain markets haven’t gone away.  The good news for investors in hedge funds is the losses are likely to pale in comparison to the fall in equities in May and June. The FTSE100 was down 6.57% and 5.23% and the S&P500 down 8.2% and 5.39% respectively.

The hedge fund strategies with the heaviest drops in June are long bias, long/short equity, Asian equities and niche strategies like biotech and technology – so basically all the equity directional strategies – with performance falling around 1-3% in the month. Fixed income arbitrage is one of only four strategies on the positive side, supporting a strong year for the sector.