11/08/2010 Author: Shannon Hawthorne

Hedge fund performance back in the black in July

Following two consecutive months of declines, the hedge fund industry moved back into positive territory in July with only two strategy indices posting negative returns, the latest Hedge Fund Research (HFR) data has revealed.

Improving conditions in the global equity markets and diminishing concerns about sovereign credit risk saw the HFRI Fund Weighted Composite Index gain 1.82%, bringing year-to-date (YTD) performance to 1.52%.

Equity hedge strategies were July’s best performers, with the HFRI EH Energy/Basis Materials Index and the HFRI EH Quantitative Directional Index posting returns of 3.70% and 3.62% respectively, while the HFRI Equity Hedge (Total) Index gained 2.88% overall.

Improving liquidity and risk tolerance also saw event-driven funds gain across the board, with the HFRI ED Private Issue/Regulation D Index boasting the group’s strongest returns (2.42%).

Only two strategies suffered losses in July: The HFRI Macro Systematic Diversified Index (-0.29%) and the HFRI EH Short Bias Index (-6.30%), bringing YTD performance to -1.21% and -8.54% respectively.