Hedge funds post July gain on stock market rally, still down for year

HEDGE funds posted a 1.65 per cent gain in July, driven by a stock market rally which helped reduce their losses for the year to date, data provider HFR said on Friday (Aug 5).

“Led by high beta strategies, hedge funds posted the strongest gains in 15 months, as powerful risk-on sentiment drove a sharp reversal in equity markets, while the US economy entered a recession and the US Federal Reserve raised interest rates again in an effort to slow generational inflation,” said Kenneth J Heinz, president of HFR.

For the year to date, hedge funds remained down 4.1 per cent, the fund weighted composite index showed.

Equity hedge funds posted gains of 2.89 per cent, underperforming the S&P 500, which went up 9.11 per cent last month. For the year, equity hedge funds were down 9.2 per cent.

Macro hedge funds, which trade a broad range of assets, such as bonds, currencies, rates, stocks and commodities, were down 1.07 per cent, their third consecutive month of losses. In the year they remained the best-performing category, with gains of 7.36 per cent.

Heinz said fund managers have positioned funds to preserve capital as well as to seize opportunities to take advantage of sudden shifts in macroeconomic conditions. REUTERS