The Eurekahedge Hedge Fund Index dropped 2.13% in August, with waning confidence of investors in the market and concerns over European debt crisis, but it still outperformed the global equity markets by 5.57% as managers focused on capital preservation strategies, according to the Eurokahedge’s report. The MSCI World Index was down by 7.70% with a downgrade of US Treasuries, which also caused the S&P Goldman Sachs Commodity Index to go down by 1.85% for the month. The losses rose in August to $ 3.2 billion but, at the same time, hedge funds have continued to attract capital with a net inflow of $ 1.51 billion in the industry (120.8 billion of net entries since the beginning of the year).
The negative performance of the “Lyxor Hedge Fund indexes” was -2.19% in August. The index, which reflects the average performance of 14 strategy indices, displays a negative performance of – 3.8% at end of August (since the beginning of the year).In august, the alternative strategies which have the better performance are: Lyxor L/S Equity Short Bias Index (+ 5.55%), Lyxor CTAs Short Term Index (+ 2.21%) and Lyxor Fixed Income Index (+0.26%).
The Dow Jones Credit Suisse Hedge Fund Index was down by 2.30% in August as well, compared with a drop of 7.69% for the Dow Jones Global Index.
Oliver Schupp, President of Credit Suisse Index Co., LLC, said, “The Dow Jones Credit Suisse Hedge Fund Index fell 2.30% in August, although three out of ten sectors posted positive performance for the month. Overall, the index outperformed global equities by more than five percentage points with Dedicated Short Bias delivering the strongest performance, gaining 6.56% as short positions across equity markets proved profitable amidst broad market downturns. Global Macro also gained 1.91% as managers employed tactical trading strategies to navigate the high levels of volatility seen in August.” Schupp continued, “The industry saw an estimated $4.77 billion in inflows. Including August’s performance, total industry assets are now estimated at $1.79 trillion.”
Dark month of August for hedge funds
According to the monthly report of the Edhec-Risk Institute, the performance of hedge funds were particularly poor in the month of August, some strategies registering their lowest performance since the crisis of the subprimes. Most hedge funds strategies have been affected by the setbacks in the stock market. In addition to the short sale (+6.97%), the only positive strategy in August was the CTA Global (0.27%) strategy.