Hedge funds stay positive despite challenging market conditions, up 0.2% in March

The Eurekahedge Hedge Fund Index was up 0.2%1 in March, with the year-to-date return at 1.33%. This makes March the ninth consecutive positive month for the hedge fund industry, as managers navigated successfully through turbulent market conditions. The MSCI World Index was down 1.53%2 during the month.

Below are the highlights for March:

– Strong launch activity was witnessed in the first quarter of 2011, with more than 150 funds launched globally.
– Japanese hedge funds outperformed Nikkei 225 by 7.32% in March 2011.
– Hedge funds with exposure to fixed income assets outperformed in the first quarter of 2011, with distressed debt managers up nearly 4% March YTD.

All regions outperformed their underlying market indices in a month that started off with declines in global markets due to discouraging reports about the European debt situation, Chinese economic data and continued political tensions in the Middle East. The disastrous earthquake and tsunami in Japan on the 11th of March, and the subsequent crisis at the Fukushima Daiichi nuclear power plant, then led to a sharp sell-off in markets around the world.

Asia ex-Japan hedge funds delivered the best performance among the major hedge fund regions, gaining 2.21% in March. The MSCI AC Asia Pacific Ex Japan Index climbed 3.66% as a number of underlying markets posted significant gains. The BSE Sensex rose 9.1% on the back of strong foreign investment flows, while South Korea’s Kospi and Thailand’s SET gained 8.63% and 6.03%, respectively.

Chinese markets also posted a strong recovery near the month-end, with the Hang Seng returning 0.81% and the Shanghai Composite gaining 0.79%. Among the other regions, returns from North American hedge funds were flat for March, while Japanese managers delivered excellent downturn protection amid sharply falling markets. Japanese hedge funds lost 0.86% on average in March, while the Topix and the Nikkei 225 lost 8.61% and 8.18%, respectively.

About Alex Akesson

Alex has been specializing in hedge fund and alternative investment news since April 2006. Working mainly in research and manager interviews, she has published breaking news on the hedge fund industry on her blog, as well as several industry publications. Her access to hedge fund managers gives her insight into news stories as well, and the ability to track press releases and other breaking news in real time.
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