New York (HedgeCo.Net) – Hedge funds posted marginal gains in November amid mid-month reversals in market trends. The Eurekahedge Hedge Fund Index was up 0.52% bringing its year-to-date (YTD) return to 4.51%. In contrast the MSCI World Index gained 1.05% for the month.
Key highlights for November 2012:
- Asia ex-Japan hedge funds were up 1.20% in November, making it the 4th consecutive month of positive returns – with the funds gaining 6.07% during this period
- The asset weighted Mizuho-Eurekahedge Asia Pacific ex-Japan Index was up 12.15% November YTD
- Event driven funds in Europe posted their strongest monthly return in three and a half years – gaining 4.77% in November
- Relative value funds continued their winning streak into the sixth month, with gains of 0.62% in November and 9.36% year-to-date
- European funds focused on distressed debt have posted returns of more than 20% YTD
- Long-only absolute return funds have delivered much stronger performance than hedge funds in 2012, up 12.23% YTD
The month started off on a cautious note with most funds and other market participants adopting a wait-and-see approach to the US presidential elections. Post-election concerns surrounding the US ‘fiscal cliff’ took over the market sentiment while mixed signals from Europe about further support for Greece added to the risk aversion. These trends turned mid-month, amid positive signals over the US budget and continued aid to Greece – while conclusive economic data from the US & China added further strength to the rallies.
Hedge funds across most regions reported positive returns for November with Asian hedge funds leading the way. The Eurekahedge Asia ex-Japan Hedge Fund Index posted its fourth consecutive monthly gain, up 1.20% as underlying markets rallied strongly from mid-month lows to end the month with an increase of 1.75%. Japanese hedge funds posted the strongest returns among the various regional mandates, up 1.41%. The announcement of snap elections in December and the proposition of unlimited easing by the frontrunner triggered renewed risk-appetite in the market with the Nikkei 225 surging to gains of 5.80% during the month.
Most strategic mandates also reported positive results during the month with event driven hedge funds posting the strongest gains of 1.46%. European event driven funds grew 4.77% in November – the strongest monthly gains in three and a half years. Winning managers reported positions in Spanish and Greek financials & bonds, as well as some distressed stocks that rallied during the latter half of the month. Macro managers reported a marginal decrease of 0.08% as both trend-following strategies and short-term systematic managers delivered losses during the month. Some managers reported gains from the FX space while funds focused on commodities were mostly flat to slightly negative in November.