HFRI: Hedge Funds Rise 1.36% To Open Second Half

Aug 8 2013 | 10:34am ET

Hedge funds enjoyed broadly positive returns in July, according to a report from Hedge Fund Research.

The HFRI Fund Weighted Composite Index rose 1.36% last month and is up 4.73% on the year. Most strategies tracked by the index suite were in the black in July.

“In sharp contrast to the volatile, risk-off sentiment of the prior month, hedge fund performance in July was driven by a positive tone to earnings season and a dynamic environment for M&A including strategic transactions, shareholder activist and special situations exposures, contributing to a favorable operating environment for long/short strategies,” HFR President Kenneth Heinz said. “While many managers continue to position for a gradual extraction of stimulus measures by the U.S. Federal Reserve and correspondingly rising bond yields, fundamentally-driven, valuation-oriented strategies produced strong results in July as risk-off sentiment moderated from the prior month and investor risk tolerance continued to normalize."

The strongest returns were posted by technology and healthcare funds, which rose an average of 4.04% (12.37% year-to-date). Energy and basic materials funds added 3.67% (down 1.29% YTD), equity hedge funds 2.5% (7.68% YTD), Russian and Eastern European funds 1.91% (down 1.04% YTD), quantitative directional funds 1.69% (4.19% YTD) and event-driven funds 1.54% (7.02% YTD).

Distressed and restructuring funds rose 1.41% (8.54% YTD), merger arbitrage 0.98% (2.47% YTD), emerging markets 0.7% (0.42% YTD), equity-market neutral 0.61% (3.4% YTD), relative-value 0.42% (3.43% YTD), convertible arbitrage 0.32% (4.56% YTD) and multi-strategy 0.23% (4.5% YTD).

With the Standard & Poor's 500 Index soaring 5% in July, short-bias funds were the month's biggest loser, falling 2.87% (down 12.65% YTD). Systematic diversified funds lost 1.07% (down 1.99%), Latin America funds 0.36% (down 6.37% YTD), corporate fixed-income funds 0.17% (up 1.33% YTD) and macro funds 0.11% (down 0.98% YTD).

The HFRI Fund of Funds Composite Index rose 1.27% on the month (4.77% YTD).

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