19/08/2010 Author: Katy Mughan

Hedge funds benefit from improving market conditions, research shows

Almost all hedge fund strategies have benefitted as the performance of the global economic market continues to improve, according to data released by EDHEC-Risk Institute.

According to the EDHEC-Risk Institute, the S&P 500 index exhibited extraordinary performance of 7.01%, its best return over the past twelve months, following two months of severe disappointment.

This, in turn, had a positive impact on equity-oriented strategies, and both the Long/Short Equity and Event Driven strategies returned to profitability, with profits of 2.13% and 1.83% respectively.

However, the best performing strategy was Emerging Markets, which posted returns of 3.04%, bringing year to date (YTD) performance to 2.2%.

On the fixed income market, convertible bonds turned positive to record their best performance over the past year, while regular bonds registered a second month of significant gains (+0.99%).

Favourably impacted by these remarkable returns of convertible bonds and the renewed rise in the credit spread of 1.15%, the Convertible Arbitrage strategy registered a significant return of 2.32%,

On the other hand, despite its significant long-term positive correlations with regular bonds and commodities, the CTA Global strategy recorded a relatively small but still disappointing loss of -0.48%.

Short selling was the only other strategy to post negative return, falling 4.31% in July, bring YTD performance to -4.7%.