Hedge funds have registered their biggest gains for eight months in September, led by rapid growth in emerging markets funds, after the US Fed said it would not immediately slow down on its quantitative easing program, according to industry analysis and consulting firm Hedge Fund Research (HFR).
A decisive victory for Angela Merkel’s Christian Democratic Union Party in Germany also helped ease hedge fund jitters about continuity after months of uncertainty about the future of macroeconomic programs in Europe.
The HFRI Fund Weighted Composite Index, HFR’s broadest measure of the performance of hedge funds worldwide, has risen 1.6 percent – the strongest performance since January and the second-best month since June last year. The gain follows a loss of 0.7 percent in the previous month. The index has gained a total of 5.6 percent so far this year.
‘Hedge funds were well positioned for the dynamic environment that materialized in September, from the equity gains and falling yields on the Fed’s ‘no taper’ decision, through the significant German elections, the healthcare stock leadership on the US Affordable Care Act and into the equity market selloff on the US budget deliberations into month-end,’ says Kenneth Heinz, president of HFR, in a press release. ‘Institutional investors are likely to continue increasing their exposure to hedge funds.’
Gains are led by an increase of 3.7 percent in the HFRI Latin America Index, which has been the worst performer of the regional indices, with a total loss of 5.4 percent so far this year. This is followed by the indices for Russia and Asia ex-Japan, which both posted gains in the month of 3.2 percent. Overall, the main emerging markets index is up 3.4 percent in September.
The worst performing index overall in the month is the Short Bias Index, which measures hedge funds that employ strategies of shorting equities. The index has dropped 2.6 percent in the month and declined 13.6 percent so far this year.
