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Nearly all hedge fund indices decline in October

hedge fund indices decline The October market sell-off hurt hedge funds almost across the board, with one major index compiled by BarclayHedge recording a 3.06% fall.

The decline in the Barclay Hedge Fund Index still managed to be less steep than in the S&P 500, which declined 6.84%. But year-to-date, the hedge fund index trails the S&P 500: it is down 1.9% while the S&P had gained 3.01% by the end of October.

Overall, 16 of Barclay’s 17 hedge fund indices had losses in October. The BarclayHedge Technology Index dropped 6.7% in response to a sell-off in tech stocks that saw the Nasdaq drop 9.2% - its worst monthly decline since November 2008. 

Equity long bias strategies lost 5.48% in October; funds focussed on Pacific Rim equities gave up 3.69%; healthcare and biotechnology strategies lost 3.42%; and emerging markets strategies were down 3.41%.

The Barclay Hedge Fund index with a gain was the Fixed Income Arbitrage Index, which was up 0.17%.

Year to date, ten hedge fund indices saw losses, but seven indices still had positive returns. For example, the Healthcare & Biotechnology Index led all indices with a 13.85% gain, and there was a 5.6% return in the Technology Index.

HFR, which also compiles hedge fund indices to report on industry performance, noted in a report last week that Chinese hedge funds posted sharp declines during October as both global equities and the renminbi fell. The HFRI Emerging Markets China Index lost 7.76%, bringing the year-to-date decline to 16.96%.  

Other Asian hedge fund indices also experienced sharp declines, HFRI said in its ‘HFR Asian hedge fund industry report’.

Top strategy areas of Asian-located hedge funds included both uncorrelated macro and fixed income-based relative value arbitrage, with these posting gains of 1.1% and 1.5 %, respectively, in the year-to-date at the end of October.

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