A sell-off of Chinese equities and uncertainty over Greece’s status in the euro prompted widespread losses in hedge funds in June, making it the worst month in two years, industry research firm Hedge Fund Research (HFR) says.
The firm’s HFRI Fund Weighted Composite Index declined 1.3 percent last month, the biggest monthly loss since June 2013, HFR says in a news release. The HFRI Macro Index, which tracks funds that invest based on certain economic variables, dropped 2.4 percent in the month, wiping out the year’s gains for a year-to-date decline of 0.4 percent.
The HFRI EM China Index, which measures funds specializing in the country, declined 3.5 percent last month, more than any other regional or country index, though the China index is up 19 percent so far this year. The HFRI EM Russia/Eastern Europe Index was next, with a drop of 3.3 percent in the month. The HFRI Western/Pan Europe Index declined 0.8 percent in June.
One of the few indexes to make gains in the month was the HFRI EH Short Bias Index, which tracks funds that short various portions of the market; it gained 0.3 percent last month, paring its losses in the year to 2.9 percent.
Chinese stocks have plunged in the past month even as the government has banned major shareholders from selling their stakes, cancelled all planned IPOs, launched share purchase programs through various brokerages and allowed the suspension of several stocks. The losses also come as markets remain jittery over a possible Greek exit from the eurozone.
‘Increased financial market volatility and reversals of many of the performance trends from the first half of 2015 resulted in declines across many areas of hedge fund performance to conclude the month of June, with an increased focus on hedge fund exposure to and positioning in Chinese and Greek/European equities, oil and euro currency,’ writes Kenneth Heinz, president of HFR. He predicts continued ‘macroeconomic uncertainty’ in coming months.
