HEDGE funds booked their sixth straight month of gains in August, according to data released yesterday that suggests the industry’s recovery is powering on.
The Credit Suisse/Tremont Hedge Fund index rose by 1.53 per cent last month, bringing year-to-date returns on the index to 11.57 per cent.
The Convertible Arbitrage strategy, where funds exploit price differences between different types of stock, continued to perform the best, adding 3.39 per cent in August, according to the index.
Mortgage-related instruments continued to be a driver of returns for Fixed Income Arbitrage managers. The strategy had the second-best monthly performance in the index, finishing up 2.38 per cent.
Meanwhile, another report said the main client base for hedge funds had switched from private investors to institutions and that this would lead to less appetite for Madoff-style “club” deals.
Morten Spenner, chief executive at International Asset Management, said institutional investors were taking over and were less focused on the use of leverage, or debt, to magnify returns. The fraud carried out by financier Bernard Madoff worked around “clubs” of investors who bought into the fund based on word-of-mouth recommendations.
HOW DIFFERENT HEDGIE STRATEGIES HAVE PERFORMED
AUGUST 2009 YEAR AVERAGE ANNUAL
2009 TO DATE GAIN (SINCE 1994)
Credit Suisse/ Tremont Hedge Fund Index 1.53% 11.57% 9.11%
Convertible Arbitrage 3.39% 35.58% 7.27%
Dedicated Short Bias -1.69% -18.68% -2.04%
Emerging Markets 1.06% 18.79% 7.58%
Equity Market Neutral 1.31% 4.26% 5.61%
Event Driven 2.17% 11.48% 9.93%
Fixed Income Arbitrage 2.38% 18.66% 4.45%
Global Macro 0.86% 6.15% 12.33%
Long/ Short Equity 1.42% 13.03% 10.14%
Managed Futures 0.92% -6.97% 6.40%
Multi-Strategy 1.43% 17.30 7.91%