Hedge funds had their worst first half year performance since 1998, as managers struggled to deal with the triple-whammy of a slowing housing market, sky-high energy prices and a financial sector in turmoil, according to HedgeFund Intelligence.
The HedgeFund Intelligence global composite index was flat in June and up just 0.55 per cent for the first half of 2008. But returns varied widely according to different strategies, with hedge funds who invested in commodities faring much better than those who focus on equities.
Emerging market funds fell the most, by 5.39 per cent in June, and are down 11.61 per cent so far this year. Asian investments were hit particularly hard, falling by 3.27 per cent in June, on pressures in the Chinese and Indian equity markets. Indian equities were down by 6.91 per cent in June, and 30.42 per cent for the first half of 2008.
But some funds continued to outperform. Those that invested in futures of all kinds posted an average gain of 2.59 per cent in June and 11.01 per cent for the year so far. Similarly, the absolute return commodities index rose by 5.06 per cent in June, outperforming all other kinds of fund.
“Investors are finding big gains in the commodity sector as the price of crude climbs, reaching $140 a barrel and rising. The knock-on effects are increased energy and food prices, which are cause for concern for G8 leaders,” said HedgeFund Intelligence.