Hedge funds enjoyed their second consecutive month of strong returns, and if they keep it up for the next two months, the industry could see its second straight year of double-digit returns.
Hedge Fund Research's HFRI Fund Weighted Composite Index rose 2.35% in October and is up 7.14% this year. Of course, overall returns like that are easy to post when just one of your 28 strategy and sub-strategy indices suffers a loss on the month, and when the Standard & Poor's 500 Index soars 3.69%.
Macro funds led the way in October, rising 2.7% (6.11% YTD). Emerging markets and equity hedge funds also did well, returning 2.51% (9.59% YTD) and 2.47% (6.16% YTD), respectively, on the month.
Event-driven funds added 1.7% in October (8.47% YTD) and relative value funds were up 1.65% (9.82% YTD).
Among sub-strategies, nothing came close to energy and basic materials funds, which soared 5.22% on the month (8.1% YTD). Other sub-strategies posting strong gains in October were quantitative direction funds and systematic diversified funds, which each added 3.62% on the month. The latter is up 8.03% on the year, and the former 7.11%.
Among emerging markets, Asia ex-Japan was the clear winner, returning 3.12% (9.6% YTD). Global emerging markets funds and those focused on Russia and Eastern Europe remain in a tight race for best EM strategy of the year, which the former up 10.63% after a 2.66% jump last month, and the latter up 10.65% after returning 2.09% in October.